First on CNBC Interview: CNBC's Maria Bartiromo Speaks with Senator Barack Obama on CNBC's "Closing Bell" (Transcript Included)
Sen. OBAMA: Right. The two points I would make. Number one, as I said, I'm going to have to take a look at what revenues are coming in when I take office because, you know, I'm not ideological and I think it is very important for us to stick to a principle of pay as you go. If I'm going to cut taxes for the middle class, as I've proposed, that means that I've got to either end some tax breaks elsewhere or cut spending. And if I want to increase spending, then I've got to find offsetting revenues or cut programs that aren't working. That's a principle that I believe in strongly and I will run on and implement when I'm president.
What's interesting, though, is The Wall Street Journal, I think--actually a columnist looked, in The Wall Street Journal, at does Obama's policies in fact add up? Do the numbers add up? And the conclusion was, yes. Because not only have I called for an end to the war in Iraq, which would not provide all the money that's being spent there--some of that's going to have to go to resetting our military, dealing with veterans and so forth--but there will be some money that we can use for other things.
Number two is the rollback of the Bush tax cuts on the top 1 and 2 percent. That will in fact create additional revenue. And the third thing is the cap and trade system that I've proposed to deal with climate change and to increase energy independence. That potentially generates billions of dollars that we can reinvest in solar, wind, biodiesel, creating jobs here in America that can't be exported. And so when you tally it all up, all my proposals pay for themselves.
Now, as I said before, it could be that revenues are so short in a year's time that we've got to make some assessments. And I am not going to initiate programs that can't be paid for.
BARTIROMO: So name three spending programs you would cut to balance the budget.
Sen. OBAMA: Oh, you know, there are probably some weapons programs that I think are not serving our national security interests that need to be examined, and we've got to do an audit there. There are reforms that need to be made in our purchasing processes, where--simple things, you know. If we actually made sure that every government employee had a single, you know, debit card or credit card, then negotiated with large purchasers to get the discounts that any other large purchaser would get, we could lop off 10 percent of some of our major purchases by the federal government. Our travel allowances and expenses are a major problem. We could save several billion dollars just in how we set up government travel. So there are a whole bunch of areas where we can make some significant savings.
I will tell you, though, that historically when--you know, the fact is that the federal government primarily spends its money on Social Security, on Medicare and Medicaid, and on defense. And that's the bulk of our spending.
The biggest thing we've got to do is get control of our health care spending, and that's why the health care plan that I've proposed, although costing some money in the front end--we've got to help rural hospitals invest in, you know, health IT. We've got to make sure that we are bringing people into coverage so that they're not going to the emergency room. Short term, that will cost us some money. Long term, the more we emphasize prevention, the less likely we are to pay huge bills down the road. That's the only way we're going to get control of health care inflation. And if you talk to any executive, as well as any actuary who's looking at government spending, our biggest crisis looming in the horizon has to do with our health care costs. And the only way to really solve it long term is to make sure that we are making for a healthier America and improving the quality of care so that we get more bang for our health care dollar.
BARTIROMO: How about trade? You've made the point that you want to improve relations around the world...
Sen. OBAMA: Yes.
BARTIROMO: ...and yet you want to renegotiate NAFTA, you are not in favor of some other trade policies.
Sen. OBAMA: But I'm in favor of some.
Sen. OBAMA: Yeah.
BARTIROMO: Tell me about the trade policies that you'd like to look at...
Sen. OBAMA: Yeah.
BARTIROMO: ...and particularly NAFTA, renegotiating that.
Sen. OBAMA: Yeah.
BARTIROMO: Why potentially impact the one area of the economy that's actually doing very well, exports and trading, and opening up markets for American companies?
Sen. OBAMA: Well, look, I believe in trade and I've said it repeatedly. And, you know, I have voted for trade agreements. I voted for the Peru Trade Agreement, much to the chagrin or some people who objected about it. I voted for the Oman trade deal. It is true that I voted against CAFTA and I voted--and I am concerned about NAFTA because they don't have the environmental and labor protections written into this legislation that ensure some basic standards, make sure that child labor laws aren't being circumvented, making sure that you don't have forced labor. I think it is important in our dealings with China to make sure that we are tougher bargainers. My problem with our trade agreements right now is not that I feel we can't compete in the global economy. I think we've got the best workers on earth. I think the problem is is that we're not very good bargainers. We--our trade mentality dates back to the '60s and the early '70s when we were so dominant in the world economy that basically if people sent their goods into this country without reciprocity, it wasn't really going to have a dent on our economy. Well, the fact is China, Brazil, Korea, you know, they're not your dad's China, Brazil or Korea. They are now major competitors of ours. We should want real trade with them, but it's got to be on a reciprocal basis. And we should put some pressure on them to improve how they treat workers, to deal with issues of environmental standards, to deal with safety standards. And part of the problem that we've got right now in our trade agreements is that US companies may move over there, get out from under basic safety standards that are important to US consumers, then the goods get shipped back into the United States and suddenly we've got toys with lead paint on them.
That is not good for US consumers and I don't think it's good for business long term. But, you know, one notion I want to dispel is the notion that somehow I'm opposed to free trade. I think it is important for us to have a trade regime. And I think it's good that China and India are growing. Ultimately they may be markets of ours and, you know what, there's just a human element to wanting to see billions of people scratch their way out of poverty. That is in our long-term interest.
BARTIROMO: What happens if the Mexicans and Canadians say, `We don't want to renegotiate.' Do we go back to the policy in place before NAFTA?
Sen. OBAMA: Well, I think that, you know, let me have those conversations with the president and the prime minister and see if we can negotiate something that makes sense for all sides. I mean, keep in mind, Mexico has some of these similar problems, you know, some of the promises that were made about the improvements in the standard of living for Mexico. Workers have not been borne out as a consequence of NAFTA. Part of the problem we're having with immigration right now has to do with a much more efficient US agricultural and agrobusiness operations going into Mexico and decimating Mexican farmers. They have been displaced first to Mexico City and other urban areas, and increasingly they come into the United States.
And so, again, the principle that I have in general when it comes to economic policies: a belief in free markets, a belief in opportunity, a belief in trade, but wanting to make sure that in all these areas that somebody's thinking about the little guy; that somebody is making sure that the economy is working for everybody and not just some people. And that, I think, is a basic difference between myself and George Bush and increasingly, it appears, John McCain, as well.
BARTIROMO: But you want to put pressure on the companies and the people that are actually creating jobs, during a recession.
Sen. OBAMA: Well, you know, I think part of my argument is part of the reason we're in a recession is because we have an unbalanced economy. Look, you know, Henry Ford was the first one to say, `If I don't pay my workers enough to buy my cars, my business isn't going to be around for a long time.' Part of the genius of America has always been that we have a shared prosperity and a broad-based middle class, and that we make investments in roads and bridges and other infrastructure that allows the market to work efficiently. And we've got a regulatory system so that investors can trust the market and don't feel like insiders are going to be taking advantage of them. That's what makes the market run. And when we lose that balance, what ends up happening is in the short term you've got some people who make out like bandits. And the only reason that we haven't seen some of these problems in the US economy previously is because consumers had been driving this, even though their wages and incomes haven't been going up, because they've been able to use their credit cards and home equity lines as an ATM. That's gone away. And so the question now is who's going to drive the economy, if not consumers? And the only way that we can make sure that consumers are able to drive that economy is if in fact they've got some money in their pockets. And right now they don't, because they are getting squeezed hard.
BARTIROMO: Final question, Senator.
Sen. OBAMA: Yeah.
BARTIROMO: And this is just in the news right now, away from business, the church bulletins. A lot of people say that they were--are anti-Semitic, anti-American. How often did you read them? Did you find them troubling?
Sen. OBAMA: You know, the--you know, I've, I think, talked thoroughly about, you know, the issue with Reverend Wright. And, you know, everybody, I think, who examines the church that I attend knows that it is a very traditional, conventional church. Reverend Wright has made some, you know, troubling statements and some appalling statements that I have condemned. He's the former pastor of that church. And I think that--and when I travel around the country, what people are really interested is making sure that, if I'm going to be the next president, that I can actually help them stay in their homes, get a job, send their kids to college. That's something that's shared by people across races, religions. And part of what I hope to do in this campaign and as president is to get us beyond these divisions that distract us from our common challenges and our common opportunities and move the country forward.
BARTIROMO: Senator, would you like to add anything else?
Sen. OBAMA: I had a wonderful time. I hope I get a chance to talk to you again.
BARTIROMO: Do you think that the Fed made the right move in terms of bailing out the financial system? Final question. A final--you know, I'm just trying to do it on BusinessWeek--I promise you, I promise you.
I'm doing a piece for BusinessWeek on you for Friday and I'm trying to do both CNBC and BusinessWeek.
Sen. OBAMA: Right.
BARTIROMO: That's why, I've tried to do both.
Sen. OBAMA: Well, now that--now this is going to be really good story, because she got at least five final questions. Absolutely.
BARTIROMO: (Unintelligible). No pressure, no pressure.
Sen. OBAMA: No, no, no, I don't mind. The--no, no. Look, the--I think that--you know, I wasn't privy to Bear Stearns' balance sheets. I think there's no doubt that we want the Fed stepping in in emergencies, and no other government agency could step in sufficiently, quickly to prevent what could have been a domino effect. But the one, you know, basic principle that I think is important is that if the Fed is going to be a lender of last resort to investment banks, then they're going to have to be subject to some of the same regulatory requirements that commercial banks are subject to. And I think Henry Paulson admitted as much in some of his statements yesterday. And I know that the Senate Banking and Finance Committees are going to be examining the nature of this transaction to make sure that it was fair to all parties involved.
BARTIROMO: Thank you so much, Senator.
Sen. OBAMA: All right. Thank you.
BARTIROMO: Good to see you.
Sen. OBAMA: All right.
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