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For Immediate Release
Office of the Press Secretary
January 24, 2008
Press Briefing by Treasury Secretary Henry Paulson on the Bipartisan Economic Growth Agreement
James S. Brady Press Briefing Room
2:34 P.M. EST
SECRETARY PAULSON: Let me just make a few comments, and then we'll take your questions. First of all, I very much thank the President for his leadership. Last Thursday, when we talked with the congressional leaders, he made the point that this is a compelling issue, it's of the utmost importance to the American people, and bipartisan cooperation is key, putting out principles, working with leaders that shared the same principles at the outset were able to come to an important agreement.
Now the work is far from over, and, as far as I'm concerned, on this package it's not going to be over until it's enacted, until we get the checks out to the American people. And, again, there's a lot that I have on my plate as we look at the capital markets and watch things carefully in this economy.
Let me -- okay, I'll take your questions.
Q How long will it take, after it's passed, to get the checks out to the American people, and is this package robust enough to avoid a recession?
SECRETARY PAULSON: Well, let me deal with the first question first, and say this is something I spent a lot of time on since we began thinking about this. And I think people will be pleasantly surprised, as we've worked with the IRS, we're going to do things that we weren't able to do in the past and move more quickly. So in my judgment, within 60 days of enactment, with just the caveat that for about a two-week period beginning in the middle of April, there's a very heavy load, a lot of payments going out of Treasury, and so that's got to be the priority. But with that as a caveat, within roughly 60 days, more or less, we will be able to begin making payments; some electronic, some by check. And then, again, looking at something like 117 million people, I believe that we can get the lion's share of these payments done in something under 10 weeks from the time we start mailing them.
Now, in terms of the economy, remember what I said -- and I have not changed my view on this -- the economic growth, there's no doubt it slowed, and it slowed rather markedly at year end. But in my judgment, it's going to continue to grow at a slower pace in here. But the risks are clearly to the downside, and given the facts that the risks are to the downside, it's too much of a cost to wait. And so what we're attempting to do here is to take quick action to provide a boost to the U.S. economy. And, again, I think what's going to help us here is that we have a program which is simple -- we knew if it was going to be complex it was going to be hard to move quickly. So we have something that's simple, broad-based, that's going to be effective because it's focusing on the consumer and focusing on getting business, making investments quickly, speeding that up, hiring people. So you're focused on those two, and it's going to be temporary.
So, again, this is not going to get in the way or sidetrack the efforts to do important long-term things or get in the way of efforts to balance the budget. So it's simple, it's going to be fast, if we can continue to work to get it through Congress quickly.
Q Secretary Paulson, Senate Democrats have made it clear that they want to add more to this package; they want to see an extension of unemployment benefits, some increases to the food stamp program. If this package gets more expensive in the Senate, is that going to be a deal breaker?
SECRETARY PAULSON: I never speculate as to what may or may not happen or what's the deal breaker. Let me step back and remind everybody that, first in the meeting on Thursday and then in the meeting we had on Tuesday that set the stage for this -- and that was a bicameral meeting, so we had the leaders of the Senate and the House. And both Harry Reid and Mitch McConnell took the lead in saying, this is too important, we need to move quickly -- so start in the House, work on a bipartisan basis, and we're very supportive of this; this is our will, okay? So we've done that.
Now, I recognize the Senate has an important role to play. I continue to believe the principles we have here are the right principles. This agreement reflects those principles. I will be up later today talking with Max Baucus and Chuck Grassley in talking about this. And we know that the Senate is very important and they're going to go through their own deliberations.
But, again, I think the American people are not going to have a lot of patience for taking time. And I think the House has set a standard, and it's a very important standard, and the American people -- we owe the American people speed, and we owe them a package that's going to work.
And that's the other thing that's key here. In the past, you've seen "different stimulus bills" where there are parts of it that really are going to have very little to do with stimulus or very little to do with making a difference in this year. And so the House has been disciplined, it set a high standard, and I'm looking forward to working with the Senate.
Q Are you open to adding more?
SECRETARY PAULSON: Again, I'm not going to speculate. I think what we've got is great. I'm very open, as is everyone, to working with the Senate. But again, right after we've completed something that we think is effective and is going to work -- and again, I appreciate the leadership of the Senate, (inaudible) Reid and McConnell making this possible. If they hadn't said, go work with the Senate, and said, we want to be part of this process early on, it would be very difficult to get where we are as quickly.
Q Secretary Paulson, can you just explain why you don't want to extend the unemployment insurance, if the goal of it is to stimulate the economy and to help people who are having trouble in the downturn? And secondly, would you be open to the idea of a second bill that would -- maybe that might allow you to give some time --
SECRETARY PAULSON: We have unemployment insurance, and unemployment insurance kicks in when it's needed. Okay, this is -- what this bill is, this proposal, which is going to very quickly become legislation and very quickly going to be passed by the House, this is aimed at providing benefits to working families, and it's clearly going to be stimulus. And that was a very important test -- and at businesses. We wanted to keep it simple, and that's where the focus is. And I'd say nothing other than that.
Q Any thought to the second bill?
SECRETARY PAULSON: Listen, I'm focused on this bill now. And there are going to be a number of policy priorities. We all have policy priorities, but the beauty of this is everyone agreed that for the good of the country, we're going to put those on a different track. This is on the fast-track. And let's get this done, and then let's think about other priorities.
Q When President Bush says that this package is the right size, is he sending a message to Congress, essentially saying, this is it; don't ask for anything in addition to --
SECRETARY PAULSON: Well, again, this is -- remember, this is Congress, this is the House, okay? This is not just President Bush. This is, we all agreed that the size -- and quickly came together on this. The President said, I think this should be big enough to be meaningful. He thought it should be $150 billion, and the House agreed. And that number was picked because it's enough to make a difference in an economy as big as ours, and not so big that it's going to jeopardize some of our long-term goals like balancing the budget.
Q Mr. Secretary, so, based on your timetable, it sounds like checks will start going out early April, and you hope to have them done by June? You were saying about 10 weeks from now?
SECRETARY PAULSON: I said -- listen, what I said was, from the date of enactment, okay, getting legislation enacted, okay. Now, I've heard some optimistic people talk about enactment by the President's Day recess in February, mid-February. And what you heard me say was, we've been able to -- as we've thought this through, think through some very innovative processes we can put in place to do things that will be unprecedented by the Treasury if they could move and start getting payments out within 60 days of enactment.
Q Right, so then enacted in mid-February, and that would be April --
SECRETARY PAULSON: And then I said that there's going to be -- when we look at the 60 days, that there's going to be a period in the middle of -- two weeks in the middle of April when it's going to be difficult to have there be business as usual, because there's just a big load of payments that need to be made then, and that's got to be the top priority. But I think that again, if all works well, as fast as at least I can hope for, that we would be talking about starting to get checks out in May.
Q So do you have any concerns, then, that it's going to take too long to actually get to people?
SECRETARY PAULSON: Well, I would say this: This will get is -- when the checks get out, they'll make a difference right away. This is -- these are aimed at people who are going to be spending the money, and so this will make a difference right away. And, again, let me just make this point -- some of you heard me make it the other day: I spend a reasonable amount of time talking to economists who say, why in the world, at a time when our economy was growing at 5 percent in the third quarter, and we're -- it's clear it's slowing down, but you and a number of other people are -- have the view that in all likelihood we're going to continue to grow at a slower level, why are you acting now?
So what we're doing -- now, again, this is not a precise instrument, but we're doing something again which I think is pretty novel. When you look at how quickly the President started focusing on this, right after the new year, before he took off for the Middle East, he said to the country: We're considering stimulus. And I think the economy is -- long-term fundamentals are very healthy, that I believe we're going to continue to grow, but that the risks are on the downside, and I care so much about this economy I don't want to take those risks.
So, again, I think this is as quick as you will see anyone move with a stimulus package. Could it be quicker? Yes. Do I wish it were passed today and we could be mailing out the checks tomorrow? Yes. But we're going to move this as quickly as we can. The first thing is we've got to get it enacted, because until it's enacted, then we can't start the -- start working to get the checks out.
Q Mr. Secretary, you talk about --
SECRETARY PAULSON: I never get anybody -- I'll go with the back, and then I'll go to you.
Q Mr. Secretary, does the AMT patch in any way -- the passage of that affect the stimulus payouts at all?
SECRETARY PAULSON: No. All I could say is that this -- there is no tax increase with this. The Democrats have waived their PAYGO rules --
Q No, but has the delayed enactment of the AMT -- that delay that goes until February, will that affect getting the checks out on time?
SECRETARY PAULSON: No. This will not -- that will not affect it. It will affect a number of filers, and it will reflect -- it would affect their returns. But it won't have an appreciable effect on this situation. Again, I tried to be -- 60 days, more or less, recognizing we've got this difficult period in April, and we're going to move very quickly.
Q You just spoke about the spirit of cooperation last Thursday, when you talked to the senators, as well as the leaders in the House. And yet Senator Reid has a release out that says the Senate will work to improve the House package by adding funds. Is that a deal breaker?
SECRETARY PAULSON: Again, I've got great respect for Senator Reid, because, remember, he set the stage for this. He was right there in the front. He was the first one to say, I defer to the House; take the lead. I'm going to continue to make the case here that we don't -- what we need is we need something that's going to be quick and be effective. And again, I don't know what he has in mind, but almost every spending program I've looked at, every infrastructure spending, doesn't meet the test of making a difference quickly, okay?
So the test we want to do, and what was so productive about the discussions in the House -- and I would say this: The Speaker and the Leader, both Nancy Pelosi and John Boehner, were incredibly disciplined, because there were all kinds of ideas that came in. And, you know, this thing could easily look like a Christmas tree. I made a joke when I was here last that Christmastime is long past, and we need something that's simple. And so it's easy. There are all kinds of ideas, but if you hold it up and you say, is this stimulus; how quick is this going to be; how quick will the money get out there this year -- I think if we can keep that discipline in the Senate, and I'm optimistic we'll be able to. Thank you.
Q Mr. Secretary, could you talk about how this is going to affect the housing market, and what elements it's going to contain to try to improve things there?
SECRETARY PAULSON: Yes, well, let me start by saying that what we don't have in this is a -- any program that would involve major government funds and would do things that would slow down the correction process in the housing market. So by and large -- and I'm going to talk about the housing in a minute -- by and large what this does is says, the biggest risk to the U.S. economy is housing, but rather than trying to distort that market, what we're going to do is do something which provides a boost to the overall economy to help cushion the impact of what's going on in housing.
Now let me talk about housing and what's in this. But to begin with, I want to step back and say that a very big initiative that we're driving is the HOPE NOW Alliance and avoiding preventable foreclosures and market failures; and there's these 108 million mortgages where their interest rates are going to be reset -- ARMs -- over the next two years. And I am quite optimistic that the program that has been put in place by the entire industry is going to lead to many modifications and fast-tracking these modifications in avoiding foreclosures. And even in the fourth quarter, the number of actions, modifications that were taken more quickly tripled versus the third quarter, and so I think that's going to make a difference.
Now, putting that aside, there are two things in this House package. One is the FHA modernization and, remember, we've got legislation passed by the Senate, passed by the House, and it's in conference. We need that legislation done. That's -- so that's part of this, and that's going to help on the -- with sub-prime mortgages, and that will be helpful.
The other thing is something which I've got to confess that, although I understand it, I didn't support it. We all -- when people talked about everybody didn't get everything they wanted -- and I guarantee you some people got a few things they didn't want -- so when you looked at the -- what there is, is, with regard to the GSEs, in this bill will be a provision that raises the conforming loan-limit. So that's for jumbo mortgages, for the GSEs, for a temporary period of time, and this will be until December 31 -- so a temporary period of time. And both the House -- and I very much, I know how committed Barney Frank is to say this will not get in the way of GSE reform. And I really commend Chairman Chris Dodd for making a similar statement about working on GSE reform, because it's essential.
Now, just so you know my view on that, my view -- and I was very clear on this throughout the side, but I got run down by a bipartisan steamroller -- I mean, Republicans and Democrats reunited on this, because I have said -- and I think I was one of the first people to say it would be very helpful to raise the loan limit for the GSEs for a temporary period of time, given what's going on in that market. It will be very helpful. But I -- longer term, of course, that flies in the face of their affordable housing mission, and I saw no reason why we couldn't get it as part of GSE reform legislation, because I think we need reform legislation, and I was somewhat skeptical that without this, we wouldn't get the reform. So now I've got to be an optimist and work for the reform, and look at the good that will come as a result of this.
But any event -- yes, in the back.
Q Mr. Secretary, what do you have in this package anything for the small businesses? They are in trouble, and many of them are really going out of because they are fearing about the falling dollars and also trade deficit, especially with China and other countries.
SECRETARY PAULSON: Well, here's the small businesses -- I would say there's many -- small businesses are doing pretty well in this country right now, and they've benefited greatly by the rate reductions. Eighty percent of the small businesses in this country pay taxes at flow-through small businesses at the top two rates, and so that's been a help.
But to get to your question with small businesses, there are two parts to this. One is -- on the business -- one is 50 percent bonus depreciation, and of course, that helps all businesses, small businesses also. And then section 179 -- and this deals with expensing, and it -- by and large, what you're really talking about is small businesses there. And what we've done is we've raised the cap to allow expensing for larger projects. And so that will be very helpful to small businesses. So I'm glad you asked the question.
Q Mr. Secretary, how concerned are you right now about the level of the dollar?
SECRETARY PAULSON: I would say this -- and you've heard me continually make this, and I'm going to keep making it, because it's got the added virtue of being totally true -- that a strong dollar is clearly in our nation's interest. And our nation, like any others, our economy goes through ups and downs. You've just heard me say a while ago, I believe our economy is going to continue to grow, and now I'm going to say -- and I believe our fundamental long-term strength is going to be reflected in the currency markets.
END 2:54 P.M. EST
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