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Warner on Economic Stimulus Plan

Bloomberg's "Money & Politics"

Feb 02 2009

Senator Warner appeared on Bloomberg's "Money & Politics" today to discuss the economic stimulus plan.  Here is a transcript of the interview:

Q: Senator Warner, it sounds like there’s still a long way between the Democratic package and Mr. Barrasso.  How close do you think you are, and do you think you can bridge those differences?

As one of the new guys on the block, I’m interested not so much in what’s Democrat or Republican, but what’s in the best interest of the country, what’s going to get folks back to work.  One of the concerns I have is, as the president outlined, we’ve got to act.  If we delay and debate and go back and forth, we could end up missing the whole construction season in many of the northern states because the money wouldn’t get out on road projects to actually be put to use this summer. 

I do think there are ways that the plan can be strengthened.  I’m particularly interested in focusing on job creation, which is absolutely critical.  I want to make sure that those funds that go back to the states – as a former governor of a state that kept its Triple-A bond rating – I want to make sure states get some assistance, but I also think states should use their rainy day funds, states should not be rewarded for bad past fiscal behavior.  So trying to make sure some of these dollars are tied to states actually stepping-up and making some hard choices is something that I’m going to be looking at.

Q: Senator Warner, I know for you and other Democrats, there are probably some aspects of this bill that you don’t like.  Are you willing to accept some changes here or is this a perfect piece of legislation?  What are some of the things you’d change if you could?

As somebody who’s used to being a governor, just recently a newly-born legislator, there’s always ways to improve a piece of legislation.  And I do think there will be efforts to work with folks like Senator Barrasso and others to make sure we get more of these funds out quicker into the economy, targeted on jobs, making sure we’re not creating long-term obligations, because the economy will recover, but we don’t want to be stuck with a lot of long-term out-year commitments that we might not be able to afford in terms of the deficit. 

Q: Senator Warner, are Democrats open to include housing here?  It was Democrats who wanted to push housing when President Bush was in office.  I can’t believe you all are that far apart from Republicans on this issue.

I think there is a great interest in focusing on housing.  As a matter of fact, the administration has indicated that $80-100 billion of the second round of so-called TARP funds were going to be used for housing.  The sooner we get some of those plans out the better. 

I’m interested in the approach around that 4/4.5 percent.  I am interested in the costs though.  I am interested in making sure that if we’re going to try to lower those interest rates, it’s again very targeted.  I think if you look all around the world, when you see governments intervene for too long in the credit markets, it ends up causing havoc.  So let’s look at what that cost would be, let’s look at how we can also jumpstart housing. 

But we’ve got to remember – we’ve got an oversupply in the housing market at this point.  Some of that is just going to have to be absorbed, so I do hope if we were to look at stimulating that housing market, we wouldn’t just look at first-time buyers, we’d also look at people who are repurchasing another home, because we’ve got make sure, on the first-time buyers, we perhaps tighten up some of these rules.  One of the reasons we’re in the spot we’re in is there were folks who got into homes that were way above their heads.  

Q: Senator Warner, are you worried about the price tag down the round, if you have a $900 billion stimulus package and more possibly down the road?

As somebody who kept Virginia’s Triple-A bond rating, actually dealt straight-up with our financial problems, I’m very worried about out-year commitments.  But I also recognize that part of this is assistance to states.  States are looking at, over the next two-and-a-half/three fiscal years, about a $300 billion shortfall, as well.  So some of these dollars, in terms of those folks who have lost their job, making sure they’ve got unemployment, making sure that there is some availability for assistance in terms of food stamps, making sure there is still adequate dollars on Medicaid.  A number of states have already run out, for example, of their unemployment funds, so some of that assistance is going to be necessary.  It needs to be targeted, it needs to be short-term, and I do believe we ought to look long and hard before we make any of these long-term commitments in the out-years.