For Immediate Release
September 30, 2008
ICYMI: McCain-Palin Campaign Conference Call On The Economic Recovery Plan
"And one last thought. I don't know of an economic theory in all my years of debating, and discussing, and learning, and reading about economics. I don't know of an economic theory on the face of this earth that suggests that raising tax rates on business, raising tax rates on small business, raising tax rates on investment capital, would be a good idea at a time of severe financial strain. The Obama plan to raise capital gain taxes, dividend taxes, corporate taxes, personal taxes, death taxes -- there is just no rationale or reason for that type of approach." -- Sec. Jack Kemp
ARLINGTON, VA -- Today, the McCain-Palin campaign held a press conference call with Sec. Jack Kemp, former Secretary of Housing and Urban Development, and Doug Holtz-Eakin, McCain-Palin senior policy adviser, on the economic recovery plan:
Doug Holtz-Eakin: "I did want to give you a quick update as I hope everyone knows Senator McCain is very disappointed by the outcome of yesterday's House vote. He had worked very hard to take a process which had hit a dead end on Thursday night and revised to the point where there were healthy productive bipartisan bicameral negotiations leading to the vote in the House of Representatives on Monday. A tremendous trajectory and sadly it did not reach the point where the bill passed. We made a clear call upon all parties to return from this short break, and as quickly as possible, get the necessary relief to the financial markets in particular, but more broadly to the U.S. economy where businesses are starting to run into dire restrictions in their ability to maintain normal operations because there's an absence of credit in the economy and that's a top priority. The Senator hopes to see it done and done quickly.
"In the interim today, he outlined some steps that the administration could take to ease the difficulties facing the economy. One would be to make sure that in any new legislation there would be an increase in the insurance on the deposits in banks. We are starting to see an erosion in confidence by individuals in the solvency of their institutions. They are shifting funds around. That confidence needs to be restored and there's nothing but an economic down flood to a loss of confidence. Other things that can happen quickly are to take advantage of existing authority that was passed in the summer housing legislation. That legislation increased the debt limit of the United States by nearly a trillion dollars. That would permit the Treasury to borrow that money. At the same time, it gave the government the ability to purchase mortgage backed securities and other housing related instruments.
"They could thus go directly into the market and take on the underlying root cause of the problem, at least in a temporary fashion while waiting for Congress to fashion a broader stabilization effort. It's also true that the Treasury has done a very clever and ingenious job of using existing funds in what's known as the Exchange Stabilization Fund. They continue these efforts to back stuff for these institutions while the Congress finishes the legislative effort. All of this is focused on making sure that in the near term our economy continues to get as well as possible and thus not suffer further damage in the credit crunch.
"But over the long term, it is imperative that we create jobs and return to the middle class the hope of a job that is the foundation of prosperity going forward. And I just want to post my remarks going forward that as Senator Obama continues to waffle, shift and recharacterize his economic positions particularly on taxes, the reality is that Senator Obama has promised to raise taxes and in his ideological drive to raise taxes he is catching in the crossfire the same small business that have created 300,000 jobs even in this struggling economy.
"The American people need to know that we will not have a lasting solution to this problem if we continue to raise taxes. And the reality is that he has promised a lot of spending. There is now another estimate that says nearly a trillion, you can go to the National Taxpayers Union, an independent authority, and their estimate is that he's promised three trillion dollars in new spending and that's only the 85 proposals to date. There are a hundred more they couldn't even put a price tag on. So in a world where you're going to spend more money than the bailout is going to cost, it is unimaginable that the American people will receive the tax relief that he's promising on the campaign trail today. It is at odds with his spending proposals. It is at odds with his history. I'll just stop there and turn it over to Secretary Kemp."
Sec. Jack Kemp: "First of all let me just say as former Secretary of Housing and Urban Development under George Bush 41, and I was on the Oversight Committee of the Resolution Trust Corporation that helped to resolve the Savings and Loans crisis of the late 80s and early 90s, and I've been calling and suggesting that a 21st century RTC-like operation would be necessary for as what Doug Holtz-Eakin mentioned, these distressed mortgage backed securities. I strongly support John's efforts to call Congress back into session as quickly as possible and have the government take an immediate action to help alleviate this financial crisis. A crisis in the Chinese dictionary is two characters: one danger, and the other opportunity. I think there's an opportunity here to not only rescue financial institutions in the United States of America, and here and around the world, but also to revive our credit markets which, as Doug pointed out, is abs olutely essential for businesses and people and Main Street to get the type of loans that are so necessary to continue economic activity in this country. So urgency is what John is calling for and I strongly support that.
"Second, he's asking the Congress to pass legislation that would allow up to a trillion dollars in mortgages. As so many people have pointed out and I think it's a root -- this equals to the root cause of the problem and one of the mistakes my conservative friends are making is thinking that somehow this is socializing our credit markets. It's not at all. As you buy these distressed properties, a, you have the value of the property. Number two, it is getting that rate of return, albeit small, and then eventually when the market turns around and it is sold, that money can be used to pay off debt and pay off the national debt. So this is a very legitimate effort by Congress and by the government of the United States to not only rescue and revive our credit markets, but to actually reduce the cost of this purchase of mortgage backed securities that would never end up costing anywhere near 700 billion or a trillion.
"I also agree with John's efforts to increase the deposit insurance cap -- $100,000 was set by the FDIC a long time ago, and it should be more than doubled as John has called for, so that we can use those, as well as the escape stabilization fund at the Treasury to provide a backstop, not only for personal accounts, but also for banks that are troubled. So I think John is providing the absolute leadership that we need to call Congress back into session and get immediate halt to this crisis.
"And one last thought. I don't know of an economic theory in all my years of debating, and discussing, and learning, and reading about economics. I don't know of an economic theory on the face of this earth that suggests that raising tax rates on business, raising tax rates on small business, raising tax rates on investment capital, would be a good idea at a time of severe financial strain. The Obama plan to raise capital gain taxes, dividend taxes, corporate taxes, personal taxes, death taxes -- there is just no rationale or reason for that type of approach. So John's approach to bring down the corporate income tax rate, to remove the alternative minimum tax, to keep capital gain tax rate and dividend taxes low, are absolute essential ingredients to getting that growth package into this period of economic instability, because we not only need to rescue and revive the credit markets and our financial institutions, we need a pro-growth stimulus to make sure that we don't go into the debts of the deep recession, the likes of which would be caused by raising tax rates on investment capital at exactly the wrong time. So that's the end of my remarks and I'll open it up to Tucker or Doug for any questions and I'll be available as well."
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