Press Conference with Senator Charles Schumer (D-NY) and Senator Edward Kennedy (D-MA)
Interview
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SEN. SCHUMER: Okay, good afternoon -- good morning, everybody. And I'm proud to be joined by my colleague, Senator Kennedy, who, among his many, many, many other accomplishments, is the longest standing member of the Joint Economic Committee where we just had hearings on the stimulus package.
And let me just say a couple of things. First, the hearings show how much we need a stimulus package. The debate has, sort of, turned from whether we're going to have a recession, to how deep is this recession going to be. Even those who say we won't go into recession think that we're going to have a real slow-down and we might go into recession. And I think there is now real worry that it won't be a short-term recession but it'll be a longer term recession.
We believe strongly that we have to have a stimulus package that is timely, that is temporary, and that is targeted. And another thing that came across at today's hearings is speed. You have to get this done quickly because if you wait more than six months, as Secretary Summers said, it won't have much of an effect. And when I spoke to Chairman Bernanke Monday he echoed the same thing. I would paraphrase what he said, but the programs themselves are less important than how quickly the money gets into the economy.
And that's why we, on our side -- one of our points here is that programs that are spending stimuli are very important because that is the quickest way to get money into the economy -- the CBO just came out with a study that said it, and you're sure that the money will be spent. Tax cuts for the middle class are something else that's seriously on the table, and then there will be other things that people will add.
The real danger here -- the real roadblock is that people throw other agenda items into this stimulus package. And in all fairness, Secretary Summers, when I asked him about housing -- something I've cared about, he said if it slows it down, you shouldn't put it in. But the number one obstacle right now, it seems to me, to getting a stimulus package, is the insistence by many that the president's tax cuts be made permanent as either part, or even the centerpiece of the stimulus package. That will derail it sure as we are here.
And, in fact, Secretary Summers said to put that in would have a negative effect. It wouldn't just -- I thought, well, it won't affect things because it doesn't take place until 2010, 2011, and the recession is right here and now. But actually by increasing the expectation of greater deficit spending, it raises interest rates -- which makes the housing crisis worse, which makes the credit crunch crisis worse. And so it's actually a negative.
So we're asked the president right now: First, to step up to the plate and negotiate with us. We want a bipartisan package. Speaker Pelosi and Majority Leader Reid are meeting with the president Tuesday in a real effort to get that going quickly. But we're also asking the president to make sure that neither he, his administration, or those in his party in Congress use the permanent Bush tax cuts as leverage to slow this down or to derail it. And on that score, the responsibility is on the president's shoulders.
Just one other thing, once again. If we're going to get this done quickly, we're going to have to come to some degree of consensus. Each side is going to have to give a little. But the main focus on targeted tax cuts for the middle class, and certain spending programs -- unemployment insurance, food stamps, that get into the economy quickly, seem to be the center of a developing consensus.
Senator Kennedy.
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SEN. SCHUMER: Thank you, Senator Kennedy.
Just one final point to augment what Senator Kennedy said. It was estimated by two of the three witnesses at our hearing that the average family now, because of the economic downturn, would lose about $1,000 this year. And if it became a severe recession, could be considerably more.
A thousand dollars, to an average family, is a lot of money because so much of what they have in their -- say, if the average income is $45,000, is into fixed costs -- whether it's mortgage, or taxes, or food, or whatever. So that's a really significant chunk of change.
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SEN. SCHUMER: (In progress) -- recession could be considerably more. A thousand dollars to an average family is a lot of money because so much of what they have in their, say, if the average income is $45,000 is into fixed costs whether it's house -- a mortgage or taxes or food or whatever. So that's a really significant chunk of change.
Q So is your -- Mr. Summers in your hearing spoke about temporary business cuts that -- (inaudible) -- spur investment, not more capital. Are you guys in favor of that?
SEN. SCHUMER: Well, you know, that's on the table. I know that the finance committee is talking about some kinds of business tax cuts, and what we really feel is there has to be a balance between tax cuts and spending stimuli. The bulk of the tax cuts should obviously be aimed at middle class families like we're talking about. But to have some business tax cuts that would take effect immediately, time -- speed is of the essence. That's certainly on the table and certainly something that we could support.
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SEN. SCHUMER: Yes, ma'am?
Q (Off mike) -- Summers on the -- (off mike) -- more of the housing sector --
SEN. SCHUMER: Yes.
Q -- (inaudible). Do you have a specific proposal in mind --
SEN. SCHUMER: Yes.
Q -- and will you pursue it?
SEN. SCHUMER: Yeah. We do, and I've spoken with Chairman Dodd of the banking committee. I'm chairman of the housing subcommittee and we have a number of things that we want done, including some of the things we've talked about before such as more counselors on the ground, Fannie and Freddie to put some money in for new mortgages, things to avoid foreclosure, and also looking at some more extensive government involvement along the lines of the RTC.
But what Summers said and I think, again, Bernanke, all of them, if that's going to slow things down make it separate because, you know, sort of injecting money into the economy is important and the (breath ?) of this is really -- it's shown in my state of New York. I'm looking at Wall Street, which is having major losses of people in middle and higher income people, and then I go upstate and I'm seeing real problems for those working in manufacturing businesses and other end businesses as well. So it's affecting New York from one end to the other, from upper middle income all the way down to the working poor. Yes, sir?
Q Would you talk a little bit more about the timing?
SEN. SCHUMER: We'd like to do this as soon as possible. That's why Senator Reid and Speaker Pelosi sent a letter to the president. If this isn't done in the first quarter -- finished, signed, sealed, and delivered and already going into effect -- it's -- it may be too late. Summers said if we did it in the first quarter we'd get a gold medal, if we did it in the second quarter we'd get a silver medal, and if we did it after that we'd get no medal. It wouldn't matter much. And Bernanke stressed the same thing to me when I talked to him, which was the recessions these days come on very quickly and if you wait too long you're going to lose maximum impact. Yes, ma'am?
Q Last year one of -- (inaudible) -- things was the stalled legislation with disagreements between House Democrats and Senate Democrats, not so much partisan fighting.
SEN. SCHUMER: Yeah.
Q How coordinated are you at this point with House Democrats?
SEN. SCHUMER: Yeah, the -- let me just say in general Democrats are quite unified on this. One of the things that I thought would be more of a problem was going to be pay-go. There's not unanimity but a growing -- you know, a growing consensus that this is not the time for pay-go because you want to inject money into the economy. Some might say well, pay for it four, five, six years out. But again, the consensus is that won't stand in the way. We have coordinated closely with the House. I've been talking to some of my counterparts in the House. Senator Kennedy has. Senator Reid and Senator Pelosi and the staffs are speaking all the time, and frankly, Democrats are quite united.
You know, some people may say well, I really want to do infrastructure. But on the basic core package there is a great deal of unanimity. I don't think divisions among Democrats will cause any problems in terms of this package. It's rather the president stepping up to the plate and really sitting down. He hasn't made up his mind yet. I've also spoken to many in the administration who have been calling, and that's a very good sign. But it's clear from everybody that the president hasn't gotten involved yet, and no one's even certain that he'll be for a stimulus package. We hope he will. We think he will. But that is not done yet.
Q To follow up on that question, when will Democrats unveil your package?
SEN. SCHUMER: Well, we're -- you know, it's -- with people scattered, at least in the Senate, until next week it's hard to put it all together. The staffs are working and I think I could speak for us -- for Senator Kennedy and I -- we'd like to see at least our package available out there -- House and Senate -- before the State of the Union to move things along.
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Q Senator, as far as what's on the agenda for the second session has the economy now taken center stage or are there going to be some other items you'll be -- (inaudible)?
SEN. SCHUMER: Well, there are lots of other items but I think the economy is the number one issue facing this country. People are really worried, even people who haven't been affected. People are worried about the future. They're worried about the future in the short term in terms of jobs and income. They're also worried in the longer term about where we're headed as a nation economically -- about how we'll be doing 10 years from now -- how our kids will be doing. So this has become -- this was always right beneath the surface, and the downturn has brought it, you know -- boom, it's broken through in a very strong way and I think it's going to be a major -- the major focus of the Congress as we reconvene.
Q Apart from the stimulus do you think you'll be working on other measures?
SEN. SCHUMER: Yeah. Certainly housing. If it's not in -- if it's not in the package, housing. Thank you.
STAFF: Thank you very much.
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