VICE PRESIDENT BIDEN: Madam President, I should start by saying it’s humbling for a mere Vice President to be in the midst of so many Presidents and Prime Ministers. (Laughter.) I’m flattered, and I thank you all very much.
I will attempt to — (inaudible) — assignment, which was to speak to what our administration is doing to deal with the crisis, but if you’ll permit me just a few brief introductory comments.
You know, I think when our children and our grandchildren look back at this moment, they’re going to say: Why didn’t they know this was going to happen? In a sense, this crisis was predictable.
And that in hindsight is easy. But, you know, there’s a — if my — if my friend, Gordon Brown, will permit me to quote an Irishman — (laughter) — and by the way, I remind our Chilean friends that it was an Irishman that helped out here, I want you to know. And President Lula, I thought it was only we Irish who spoke too much, I didn’t think that was just a Latin problem. (Laughter.)
But the poet William Butler Yates, speaking about an incident with Great Britain in a poem he wrote called “Easter Sunday 1916”, he used a line in that poem that I think is particularly appropriate, applies to this moment. He said, “The world has changed, it has changed utterly, a terrible beauty has been born.”
The fact is the world has changed utterly — not merely technology and information, but the world has changed in every respect. It is fundamentally different than it was — I’ve been a United States senator since I was 28 years — 29 years-old, since 1972. The change that’s taken place from roughly 1989 to today, both politically, economically, technologically, is staggering.
To quote an American columnist, Tom Friedman — he talks about the world being flat. It is flat. It’s flat like it never was thought of before. And it is — it seems to me that we should not overreact — we should not overreact. It’s not a choice of markets or governments, in my view. Markets are still — a free market still needs to be able to function. But if I can steal a phrase from a former President speaking of a crisis in 1932, a worldwide depression, it was referenced about him that he saved capital — saved capitalism from the capitalists.
Well, it seems to me –(inaudible) — have to, in a sense, save the markets from free marketeers right now. And the essence of that requires transparency and accountability. And I think what — I know what President Obama and I are attempting to do in our administration, and I want to make it clear: What we’re doing domestically I’m not suggesting is the answer for any one of you. That’s for you to decide. We are not here, and I am not attempting to in any way suggest or dictate what we think the outlines of recovery should be. I can just tell you what we think it is for us and what role we think we have an obligation to play in the world.
And that is that it’s time to build a new foundation for a much broader and sustained growth moving into the 21st century. And I think to the extent that — are we able to — is it being translated?
I think the answer lies less in ideological prescriptions than it does in practical applications of the circumstances we face.
And so I’m going to talk a little bit about how the United States is attempting to respond to this economic crisis. And we understand we share a responsibility. Some of you suggest we are primarily responsible, but regardless of your perspective, we understand we share a real responsibility. Some of the approaches that I’m suggesting may be applicable elsewhere, as I said, but I recognize that every country’s circumstances are different.
For the Obama/Biden administration, progressive government in a time of economic crisis that we find ourselves in means basically four principles. The first is to aggressively pursue the necessary steps to offset this recession, and bring about robust economic growth. Forbearance is not an option. Some of our colleagues around the world seem to think that forbearance may be the answer. Well, we will not stand down in our country until we reverse the negative trends in jobs and incomes that exist within our country — and in many of yours, all of yours, quite frankly.
The second is we want to build a policy framework to ensure that, A, we can achieve lasting prosperity, based not upon excessive borrowing supported by speculative bubbles, whether they be the dot.com bubble or the housing bubble, but by investing
in the future, by — and secondly, that prosperity has to be broadly shared. It has not been in my country and many of yours over the past decade or more. We believe it’s essential that there be a strong middle class, and access to the middle class from those who are striving to join it.The third principle of our agenda is that making public investments in health care, energy, and education are the three areas we believe are the new foundational basis upon which we can build a sustained economic growth that everyone can share in.
And, fourthly, doing all this in the context of a fiscal budget that ramps up to meet the crisis we face today, and then has mechanisms built into it that allows it to achieve a stable fiscal path by building into that budget that we’ve submitted the ability to regain control of these deficits.
Progressive governance must occur with respect to a global economic context within which we all reside. We recognize that, as well. The President and I realize how interconnected our economies are and we are deeply committed to resolving this crisis we all face. A strong American economy, not out of a sense of chauvinism, but out of a sense of necessity, a strong American economy is integral to a strong global economy, at least for this moment.
As Madam President has pointed out, we — 25 percent of the world’s GDP is the United States. So that if we do not prime the pump, if we do not get our engine running again, we all have a problem, particularly — particularly less-developed countries.
And so we are aggressively pursuing a domestic policy agenda that I will elaborate on in a second, but we’re thinking globally, as well. An important part of the G20 agenda is beginning the discussion about coordinated policies to reduce the systematic risk that we now all understand exists in global markets. A global market in the year 2009 is fundamentally different than what a global market was in the year 1980, or 1990, or even 1995.
And so I’d like to share with you our administration’s economic agenda. And we’re addressing this crisis in four parts: First, a recovery package. Now, I might add, we talk about politics — we all understand we’re all politicians around this table. I think that’s a good thing, not a bad thing. I’m proud of it. But we’re all politicians. And we understand how difficult it is to take what are very complicated notions and explain them to even very well-educated portions of our public.
Who ever talked about derivatives before? How are we explaining to people how complicated the international financial system is, and international monetary policy? It’s a complicated thing to communicate to well-educated constituents.
And so this recovery package was difficult for us to start with, because we inherited a deficit of $1.2 trillion. Even in America, that’s a lot of money — $1.2 trillion. So this recovery package, already approved by Congress, was to restore economic demand. And in the face of this deficit, we went out and said, by the way, we want the Congress to appropriate and we want to spend over the next 18 months another $787 billion, adding initially to the deficit.
In the face of this deep recession, we passed the largest stimulus — fiscal stimulus package in the history of our country — I’d suggest maybe in the history of the world. And since the Great Depression of the ’30s, our country has widely accepted the practice of temporarily pacing the missing private sector demand with public sector demand.
And we are — it’s projected that
for at least the next two years in our country that public sector demand will be off by at least a trillion dollars per year. And so there’s nothing ideological about this; it’s just a practical approach, that when a trillion-dollar demand is taken out of the economy, it need be replaced, at least in large part in order to stimulate the economy. And that’s what we did with this $787 billion package for this year.And we hope and believe it will create or save 3.5 million jobs by the end of the year. Because as our folks understand, if people don’t have jobs — to make the President’s point — they don’t have income. If they don’t have income, they cannot purchase anything. If you cannot purchase anything — and the list — the cycle goes on.
The Recovery Act, as we call it, provides a necessary jolt to our economy to implement what we refer as “shovel-ready” projects, meaning projects that were on the books that were needed in the municipalities and the states that would improve the quality of life for our constituents, the competitiveness of our businesses, but were unable to be funded. Because we wanted to get the money and we were attempting to get the money — it’s my personal responsibility — I learned something about you Presidents — don’t send you long memorandums suggesting how we should proceed without being ready for the President to turn to you and say, okay, go do it. So I’ve been given that responsibility to marshal and account for $787 billion. I guess that’s easier than trying to raise it. (Laughter.) But the fact of the matter is it is a Herculean task.
And so we hope it provides a necessary jolt to the economy. And we’ve done countercyclical measures. I won’t bore you with the detail of the plan, that’s not particularly relevant. But we’re going to use this money to create mostly — the vast majority of which create private sector jobs, not public sector jobs. Over 80 percent are private sector jobs. And we’ll be doing that by rebuilding our infrastructure, beginning the process.
And we’re going to construct — and at the same time, we hope that in this package we have picked those — funding of those projects that will lay the foundation for a stronger and sustained economic growth for the 21st century — constructing wind turbines, solar panels, a new energy grid, laying broadband and expanding mass transit, investing in health information technologies to save health care costs.
The stimulus makes a real commitment to renewable energy, energy efficiency, and a stronger energy infrastructure in the name of reducing carbon emissions and reducing our dependence on foreign oil, but in addition to that, creating jobs immediately — good-paying, sustainable jobs. Now, above all, as I said, it’s about jobs.
Our next element of our plan, in this sort of three-legged stool here, is that we believed that it was necessary, although it is the most politically painful part of the process, and that is — that is restoring our financial institutions.
Now, I don’t know about your constituency, but mine believes that it’s all the problem of those financial institutions. To use the popular jargon, were they not so greedy, were they not so this or that, we wouldn’t be in this problem; why are we saving them? Why are we helping them? It’s not an easy answer, in a political context, to provide. But we all know it is necessary. We need to get credit flowing again.
And so when our housing bubble burst, our banking system took a huge hit, and our credit markets froze up. And until we start lending again, it’s going to be very difficult for the U.S. economy to get the lift it needs, and by extension, very difficult for us to provide the lift that the international economy is looking for us to provide.
So when there’s no lending, creditworthy families can’t afford to buy homes or cars. I’m talking about creditworthy families. I’m not talking about families who, for good or bad reason, are not creditworthy, but when creditworthy enterprises are not able to move, the whole system begins to implode and turn in on itself.
So our financial rescue plan takes some of the following steps to address this. A, it gives private investors the incentive to partner with the government to clear bad assets off the balance sheets of these banks. It also floods the credit market with liquidity, hundreds of billions of dollars from our Treasury and Federal Reserve Bank to loosen up credit lines. Thirdly, it recapitalizes our banking system, strengthening the balance sheets with direct capital injections. And finally, and perhaps the most important step, is to introduce a set of financial market regulations that will prevent excessive speculation, under-regulated processes that got us in this mess in the first place. And we’re actively rolling out these ideas, and will do so in advance of the G20.
The third element of our plan is housing. The housing bubble that inflated over the last decade burst in 2007, and may ultimately mean a loss of $6 to $8 trillion in housing wealth in our country. And to address this part of the fallout, our housing plan works with mortgage lenders to help homeowners refinance to cheaper loans. That’s why we reduced interest rates so dramatically. It avoids foreclosure to those with high debt-to-income ratios by modifying the terms of their loans. And we believe these plans are going to help a minimum of 9 million homeowners in the United States stay in their homes.
And the fourth and final piece of our — and I want to make it clear now, I hope this does not come off as proscriptive, that we think we’re doing all this right and, therefore, why doesn’t everybody else do the same thing. We do believe this is what is necessary to get the engine going again in the States.
The fourth and final component of our economic budget and — is the second most difficult part of our agenda, and that is that we set out a budget — (inaudible) — roundly criticized by the opposition, and that’s legitimate for them to do, but also, some skeptics in our own — among our own friends, in our own parties.
(Audience participant speaks.)
VICE PRESIDENT BIDEN: Whatever you said, yes. (Laughter.) I just like the way you said it. (Laughter.) No, they always criticize. I like the way you say it, though. (Laughter.)
But this component of our economic plan seems to fly in the face of what some of our friends internationally, and at home, can’t understand. It, in the near term, also further raises the deficit. And our budget is over $3.7 trillion. And the budget has three goals. One is to set aside the needed funds to meet the current challenge we face, begin to make the long-term investments critical to our economic future, and ramp down the currently elevated spending levels to get to a sustainable fiscal path.
The major lesson from the Great Depression, in our view, is that forbearance is not an option. That’s what Herbert Hoover did for a couple years, and Franklin Roosevelt inherited the Depression and he started to change it. It’s not just a question of having a social safety net to save people from falling; we want to lay a foundation for a new economy so that prosperity can be broadly shared and we can build a platform and not just a safety net.
I would respectfully suggest that with the advent of the social welfare state after World War II, which made sense and was necessary, we find out that a safety net that relies upon the largess of the wealthy and wealthy nations in not the best bet always to make. It’s not always available. We’d like to go beyond that and actually begin to change access to wealth formation for all people.
We want to reform our health care system, reducing costs and increasing coverage, and we invest in the budget of $600 billion in health care over the next decade to do that.
Now, we have a meeting of the minds, believe it or not, we’re no longer engaged in the polemic argument at home that we went through — and most of you settled years ago — about whether or not health care is a right or a privilege, and all of that. American businesses figured out they’re at a serious competitive disadvantage without a rational health care system.
We also realized that there’s no way to gain control of our out-budget years and our deficit without controlling the cost of health care. Health care costs went up 54 percent in the last eight years and wages increased 3 percent. It is an unsustainable position purely from a budgetary point. So we believe we’re generating some consensus.
We also want to make our country energy-sufficient [sic] while creating sustainable clean energy for the 21st century. As President Obama has said, the country that harnesses the power of sustainable renewable energy is going to lead the 21st century. And like all of you, we want to enter the competition to do that, to lead. By investing in development of clean, renewable energy, the President’s budget is going to reduce our dependence on fossil fuels, create millions of good-paying jobs in the private sector in a new green economy. And at the same time, we hope and believe that we will begin finally to meet the threat of climate change.
And we seek to modernize, thirdly, our education system to foster economic growth and competitiveness now and into the future. Among the things that the budget does is build in the Recovery Act expanding the size of what we call Pell grants that provides access to college for the poor. We also support funding and support — renew initiatives at state and local levels to help low-income students and the like.
And the one thing I can say, if I could wave a wand, beyond providing food and sustenance for all of those in the world under pressure now, it would be to educate the world’s public. (inaudible) — a lot of us have good education systems, but quite frankly, access to those systems even in some of your countries, I respectfully suggest, is not as accessible as it should be. But that’s for you to decide, not us. We know in our country it has to get better.
So, in conclusion, let me say that be assured that we are aggressively attacking a full set of challenges
that are facing our economy. We expect the recession to end later this year. But as President Lula pointed out to me last night — and all of us, and we all know — is that employment will lag far behind. We’re still going to have a very, very difficult circumstance in our country — and most of our countries — even when the GDP begins to grow again, as it hasn’t in our country. We’re technically in — not technically, in fact in recession. So unemployment is likely to continue rising.However, thanks to our recovery package, we expect it to rise less than it otherwise would. And at the same time, the most important thing we can do during this whole process — and it’s going to begin at the G20 — is to reset the rules of the road; to have common sense oversight that keeps us from getting back into the same spot we’re in 10 years from now. And that’s an effort that we look forward to joining all of you, our global partners, in doing.
So let me conclude by saying that we — President Obama and I sought these offices because we had a fundamental disagreement with the policies of the last administration. We don’t question the motive of the last administration; we question seriously their policies. And it’s a little bit like that old metaphor — it takes a while to turn around a super-tanker. We are moving as rapidly as we can to change the direction of our country and our policies, but we’re going to have to ask — and we don’t expect to get it, but we have to ask for a little bit of patience as we move forward.
To be able to do all we need to do all at one time is not likely. We’ve only been in office now a couple months, and we’ve made some fairly significant changes. But the most important one I want you all to keep in mind, as we really, genuinely — we genuinely want to be collaborative. We genuinely want to engage in consultation. We genuinely want to know what others think.
We do not look to ourselves as the engine to solve the problems; we only look to ourselves in joining you to jointly solve the problems. But I will end with where my friend from Argentina began, that we do need rules of the road. We acknowledge that. And we will play by the rules. But one of the things I would say to all of us is when the rules are broken don’t just expect us to enforce the rules. Let me say that again — when the rules are broken, as they repeatedly are, we are reluctant, as an international community, to enforce the rules, whether they be in Iran or whether they be in other countries in the world.
So we are going to join — once the rules are set, we will abide by them as part of the effort to draft them, but when they’re broken there’s a need for all of us to step up.
And so the good news is there’s a change. The bad news is, for you all, there’s a change. (Laughter.) as I said to one of you — and I will not — we were joking — I said, the very good news is that we’re willing to, and want to collaborate. The bad news is that you don’t have the last administration to use as an excuse — I use this phrase editorially, not “you” particularly — the last administration as an excuse for non-action.
So we look forward to working with you. I’m delighted to be here and I truly am flattered, as Vice President, to be here and given the same privileges as the Presidents of these great countries — and Prime Ministers. Thank you very much. (Applause.)
(Source: White House)