Business Conference Hears From Treasury Experts
RENEE MONTAGNE, host:
And of course the automakers are just one sector of the troubled economy. In an overview of the crisis, Treasury Secretary Henry Paulson shared a stage in Washington, D.C., last night with two of his predecessors. The former secretaries Robert Rubin and Larry Summers both served under President Bill Clinton. Their names are now being mentioned for possible jobs in the Obama administration. NPR's John Ydstie has this report on how the Treasury secretaries, past and present, assessed the current situation.
JOHN YDSTIE: The venue was the Four Seasons Hotel and a conference of CEOs organized by The Wall Street Journal. The Journal's Alan Murray questioned the three economic heavyweights. He began by asking Secretary Paulson to assess on a one to ten scale how much progress has been made in solving the financial crisis.
(Soundbite of conference)
Secretary HENRY PAULSON (Treasury Department): Well, I don't like to deal with one to ten scales.
Mr. ALAN MURRAY (Deputy Managing Editor, The Wall Street Journal): We can make it one to five.
(Soundbite of laughter)
Secretary PAULSON: But I will say this. If - I will say - if the issue was to stabilize the financial system and prevent a collapse and get by the point where people are - the market is rattled wondering which big institution will go down next, I think on a scale of one to ten, we're very close to ten there.
YDSTIE: But now, said Paulson, there's a lot of work needed to restore the financial system so that it can function in a way that will help revitalize the struggling economy. Former Secretary Robert Rubin acknowledged that Paulson and his team have made some progress.
Mr. ROBERT RUBIN (Director and Senior Counselor, Citigroup): I think the financial system is in better shape today than it was before Hank and the people at the Fed acted in the various ways they acted. I agree with Hank on that. There certainly are many issues lying ahead in the financial system. I think the single most important thing we could do right now is a very large fiscal stimulus married with, married with a commitment once the economy is healthy again to put in place a multiyear program to get back to a sound fiscal regime.
Mr. MURRAY: OK. Let's talk about the fiscal stimulus. Larry Summers...
YDSTIE: In case you didn't catch that, at the end of his answer Rubin was reprising his old role in the Clinton administration as a champion of fiscal rectitude in balancing budgets, a battle he won at the outset of the Clinton administration, but an emphasis that will almost certainly have to wait in the Obama administration as stimulating the economy takes precedence. That brings us back to Alan Murray's question for Larry Summers about what's needed in terms of the size and duration of an economic stimulus package. Summers recalled that at the beginning of the year, he had suggested that any stimulus should be, quote, "timely, targeted, and temporary."
Dr. LARRY SUMMERS: (President Emeritus of Harvard University's Kennedy School of Government): I frankly think the situation has deteriorated very substantially from that point. And so I would go for speedy, substantial, and sustained over a several-year interval.
Mr. MURRAY: So not temporary.
Dr. SUMMERS: I think we're going to need some impetus to the economy for two to three years.
YDSTIE: Summers said a stimulus program could include elements that achieve some long-term goals too, such as spending on infrastructure, on energy, and on health care. But he suggested budget cuts and tax increases, which are anti-stimulative, might have to be delayed. These are all elements of the Obama agenda, but Summers never referred to the president-elect directly and took pains to indicate his comments were simply his own opinions. He never answered how many hundreds of billions might need to be spent. As for the topic of the moment - whether to bail out the U.S. auto industry - Secretary Paulson had this comment.
Secretary PAULSON: The auto industry is an important industry, and I don't think it would be good to see the failure of an auto company in this tough period we're going through right now.
YDSTIE: But Paulson said taxpayer money should only be provided if it clearly puts the auto companies on the road to sustained viability. Rubin agreed saying any aid needed to get the companies into an economic model that would succeed in the long term. John Ydstie, NPR News, Washington.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.