CNBC "Squawk Box" - Transcript

Interview

MR. QUINTANILLA: Congress is back in session and with the government's seizure of Fannie and Freddie and buzz about a second stimulus package, economic concerns are obviously a central theme heading into Election Day.

Here now with more, House Majority Leader Steny Hoyer joins us this morning from Washington, D.C.

Congressman, good to have you back on the program. Welcome.

REP. HOYER: Thank you, Carl. Good to be with you.

MR. QUINTANILLA: The general take over and over again has been -- it's a shame we had to do this. No one wants to do this. We're not happy about it. But we had no choice. The bigger issue now is how these things are structured going forward.

Do you agree with that?

REP. HOYER: I think that's accurate. I think -- I talked to Secretary Paulson on Sunday. I agreed with the action. He didn't want to take it. I don't think anybody wanted to take it, but it appeared to be necessary and I think it's going to bring some stability. I think the market reflected at least a positive response initially and we'll have to see where we go from here.

MR. QUINTANILLA: Yeah. Did you have a feeling this was going to happen when they first came to the Hill?

REP. HOYER: Well, we certainly hoped it wouldn't come, but you know, we passed a regulatory bill last year in 2007 and sent it over to the Senate, unfortunately, it didn't pass until this year. So we tried to act and, of course, in the first six years under Republican leadership, we passed bill through the House, which most Democrats voted for to try to bring tighter regulation and it languished and didn't pass in the Senate when the Republicans were in charge and took a long time when the Democrats were in charge.

So we're hopeful that this will stabilize the market. I think it's too early to say exactly what the next steps are going to be. Secretary Paulson agreed with that and says let's see what happens.

MR. QUINTANILLA: It's almost a moot point to try to assign blame at this stage of the game.

REP. HOYER: I agree with that.

MR. QUINTANILLA: But Senator McCain and Governor Palin have a piece on the op-ed page of The Journal today saying for years Congress failed to act and that's what the real problem was, that there wasn't reform put in place earlier and saying that it was really the failure of Congress and the success of Fannie and Freddie's lobbyists.

REP. HOYER: You know, it's interesting that the failure of Congress to act -- Senator McCain continues to deny that the Republicans were in charge of the Congress for the first six years of this decade, and very frankly, they still control the presidency. So we haven't been able to take any action without the president's approval, and very frankly, his party has been very resistant to change. As I said, we passed a bill in '05 through the House with significant Democratic support, overwhelming Democratic support, but the Republican Senate didn't pass it. We then passed a bill when we took over in May of last year and also sent that to the Senate. It got tied up. Very frankly, there was disagreement between Senator Shelby, the Republican ranking member on the direction we wanted to go and, frankly, we were in agreement essentially with Secretary Paulson.

So it wasn't a disagreement in terms of the administration and ourselves, at least Secretary Paulson -- it was a disagreement in the Senate. But having said all of that, I think you're right. Assessing blame is very interesting, but what really is going to be important for the American public, for the housing industry, for people who want to get homes and stay in homes is how we stabilize this market.

MR. JOE KERNEN: Later on, The Journal goes, another piece here. I don't know whether you saw this. Patron saint of Fannie Mae and they've got eight instances about Representative Barney Frank and his enabling of Fannie Mae. So it is tough to assign blame. I guess it depends on which paper you read.

REP. HOYER: Well, let me say there's no doubt that we believe Fannie Mae and Freddie Mac were important institutions that provided home ownership in this country. They've served that purpose. Obviously with the collapse of the home market, they were the biggest holder of paper and they took the biggest hit. There's no doubt about that. But the fact of the matter is they accomplished the objective that the Congress and the American people wanted and that has facilitated a large number, millions and millions of people being able to get into homes.

MR. QUINTANILLA: So now we're heading into the last couple of months of the presidential campaign and the term second stimulus is coming up again and again. First one whether you liked it or not, certainly helped the data during the summer.

REP. HOYER: That's right.

MR. QUINTANILLA: Do you think a second round has some political legs?

REP. HOYER: Well, clearly, we've seen unemployment spike up to 6.1 percent. We've seen the economy continue to be mired and we believe that the second stimulus package is warranted and necessary and we are considering the components of that and certainly we're worried about people running out of their unemployment insurance. We're worried about people who are going to be faced with heating bills that they can't afford. So we think the Low Income Energy Assistance Program states are being really stretched with their Medicaid obligations. And we think we need to invest in our infrastructure and create additional jobs here at home.

When you compare the last eight months of the Clinton administration in 2000, their last eight months, they created about 1.4 million jobs during that period of time and people were saying we're going into a slowdown. This administration has lost over half a million jobs every month this year.

So we have a net turnaround of two million jobs. So, clearly, we have still not stimulated the economy so that people have jobs and some security. Incomes are down. Poverty is up. So we think we need additional stimulus of this economy.

MR. KERNEN: But I heard you say infrastructure spending, right?

REP. HOYER: Yes.

MR. KERNEN: I did not hear you say anything resembling an echo of the tax rebate that we saw.

REP. HOYER: I don't think you're going to see a tax rebate per se. No. I think we're going to invest in programs, both for unemployment, for low-income energy, for, obviously, dealing with the unemployment problem and investing in our infrastructure, which will not only create American jobs, but help spur our economy. We think that's what's needed at this point in time.

MR. PEEBLES: Mr. Secretary, Don Peebles, good morning. I'm sorry, Mr. Majority Leader.

REP. HOYER: Whatever I am.

MR. PEEBLES: How are you? One of the questions that I think the business community is asking is what's going to happen in terms of taxes? Congress began to look at restructuring and reorganizing taxes for private equity and entabeled it for this session, but the market is looking at that coming up next session.

Do you think in this economic environment we're in now that Congress is going to have an appetite to make some changes in terms of taxes that will ultimately result in a higher burden on private equity?

REP. HOYER: Well, I think, certainly, as you well know, that has been under consideration. There has been discussion about it and, in fact, we passed legislation we believe very strongly that what we ought not to do is add to the debt and having said that, if we pass the stimulus package, it doesn't make sense from our perspective to both stimulate and depress at the same time, which is, of course, the principle we applied in the first stimulus package. We did not raise taxes, in fact, we gave, as you know, tax benefits to business in that stimulus package along with rebates to individuals.

So we're looking very carefully at that and we want to stimulate, not depress, but in the long term, certainly, we want to see a fair taxation system and we want to see the government pay for what it buys and stop the spiraling deeper, deeper into debt. That is not helpful to our country. It causes danger to our economy and we think it's bad policy and we've added, as you know $1.6 trillion in deficit spending over the last seven years. We think that has not been helpful.

MR. QUINTANILLA: Coming out of the Republican Convention, there is more concern, I guess, among Democrats about Senator Obama's ability to meet his fundraising targets, some of the poll numbers. Do you think when you're honest with yourself that the Republican Convention was one of the more effective uses of communication in recent years?

REP. HOYER: I think the Republicans did, in fact, convey a message of change. It's interesting what they saw was -- Barack Obama for 18 months saying we need to change things as they are in Washington. That message was and continues to resonate very strongly. Barack Obama continues in my opinion to be the agent of change and while the message resonated of change, the record does not reflect a commitment to change. John McCain has been saying throughout the primary, look, I voted with George Bush 90 percent of the time. He now says he agrees with his economic policy, he agrees with his international policy.

MR. QUINTANILLA: Right.

REP. HOYER: It's hard to think that's changed.

MR. QUINTANILLA: But it sounds like you think at least from a tactical standpoint, the Republicans did their job.

REP. HOYER: In the short term I think the change message resonated. I think in the long term, people are going to reflect upon the actual record, the actual stances. Both the presidential candidate John McCain and his vice presidential candidate and they're going to see that it's more talk than walk.

MR. QUINTANILLA: We'll see. Not many days for people to make up their minds. Congressman, always good to have you.

REP. HOYER: Thank you very much. Good to be with you.

MR. QUINTANILLA: House Majority Leader Steny Hoyer joining us from D.C.

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