CNBC "Interview With Senator Charles Grassley" - Transcript

Interview

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MS. REGAN: The ball is in the Senate's court now that the House has passed that $819 billion stimulus bill, which failed to garner really any Republican votes at all. Meanwhile, there's also new legislation aimed at enhancing oversight of the $700 billion bailout plan.

Republican Senator Chuck Grassley of Iowa is a co-sponsor of the TARP bill, the ranking member of the Senate Finance Committee joins us right now live from Capitol Hill.

Thanks for being with us.

SEN. GRASSLEY: Glad to be with you, Trish.

MS. REGAN: First off, how are you going to vote today, senator?

SEN. GRASSLEY: Well, I think I better wait until we get done because we're going to offer an awful lot of amendments and I hope to get some of those amendments adopted so maybe I can vote for it. But let me give you a sample from the committee, you know, the argument is why we have to give state aid is because we don't want states raising taxes during a time when we have a recession because that would be bad for the recession, the same way if the federal government were to raise taxes.

I offered amendments to make sure that if states that receive this aid can increase tuition or increase their taxes and the Democrats voted it down. So it seems to me that we're not using the state aid and taking the precautions we should in it.

MS. REGAN: So realistically, you don't think then unless your amendments were to get approved that you'd be voting in favor of this today.

SEN. GRASSLEY: Well, I voted against it in committee, so maybe that will help you some and it was -- all of the Republicans voted against it except one.

MR. KUDLOW: Well, Senator Grassley, let me raise a couple of points, it's good to see you again, sir. You've got a lot of breaking news now, okay. Alice Rivlin, former Clinton adviser says this is a terrible package; defer it several months before you make up your mind. Marty Feldstein in The Washington Post this morning who all the Democrats have cited is withdrawing his support and says defer it for a couple of months.

Rush Limbaugh is in The Wall Street Journal saying, slash the corporate tax rate in half and have a capital gains holiday and Larry Lindsay says, take three percentage points off the FICA Social Security payroll tax, both the employer and the employee.

Now, those are a lot of very interesting ideas, more pro-growth tax cuts and defer this whole package, by the way, Rasmussen says public support for it is down to 42 percent.

Mr. Grassley, can any significant changes be made? And shouldn't this thing be put on hold until it is sorted out properly?

SEN. GRASSLEY: Well, I don't -- we're not going to be able to do the latter because Senator Reid just announced that it's his goal to get a bill to the president by February 15th and with the numbers that the Democrats have in the Senate and House, that's probably going to happen.

So let's look at what we can do between now and February 15th. We Republicans feel that on the expenditure side that there's too much gravy, it's a gravy train for long-term programs, not just for stimulus. We need to make it stimulus only. The other side is it is short on incentives to invest and investment is what we ought to do in order to create jobs.

MS. REGAN: Okay. We know that, guys, we --

MR. KUDLOW: That's the key.

MS. REGAN: We know that at this point. I want to jump over to this TARP issue, Senator Grassley, because every trader I talked to on the floor here of the New York Stock Exchange is very anxious to find out exactly what the details of this program might be. I know you've got a bill for an oversight committee so that the GAO knows exactly how the money is going to be spent. But give me some details, some sense of how this might actually happen?

SEN. GRASSLEY: Okay. Well, the bill is this simple. We have a special inspector general in the Government Accountability Office doing some oversight. They can get records from the Treasury Department, but they can't go to the banks and get records. Our bill lets them go to the bank to get whatever information they need so they can do detailed oversight.

MS. REGAN: How do you think the pricing for these assets will happen, senator?

SEN. GRASSLEY: Well, now you're asking a whole different question, you know, this is involved with everything that TARP is doing, taking toxic waste out. It is involved with a question of a good-bad bank or a bad-bad bank. It's looking at what, maybe some changes that the United Kingdom made along that line that don't seem to be working very well, that we have to take a look at. But the real answer to your question how this second tranche of TARP is going to be used, I can just tell you what President Obama told the Republican Caucus two days ago, he said I've got my team working on it. We're going to try to speed it up, but he couldn't tell us either.

MS. REGAN: But you were in favor of the original plan by Paulson to actually do a very similar thing, buy up all the toxic assets off the banks' balance sheets, but you're not so much in favor of this one. I'm just trying to understand the change.

SEN. GRASSLEY: No, I voted against the seven tranche because of the inconsistency because what it was sold to us as taking the toxic paper out wasn't done. It was liquefying the banks and, quite frankly, it's an expression of views from my constituents that they see the first $350 billion being used up and not seeing it doing any good yet.

MS. REGAN: Okay. Senator --

MR. KUDLOW: But what about tax changes to come back to that. Mr. Grassley, can you make -- you've got your AMT in there, that's good. Can you make any of these pro-growth tax changes? Doesn't President Obama want to get Republicans in conference and later to sign onto this bill?

SEN. GRASSLEY: Well, that's true, but he's not going to do what it's going to take a lot of our Republicans to do, including maybe this one, I don't want to speak, but I know a great deal of our caucus is going to do what you said was one of those five options you just threw out here.

MR. KUDLOW: Right.

SEN. GRASSLEY: And that's to make the tax policy that is going to sunset December 31st, 2010 and then end up with the biggest tax cut in the history of the country, make that tax policy permanent.

MS. REGAN: All right. We've got to leave it there. Senator Grassley, thanks so much for joining us today.

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