FOX "Interview With Senator Lindsey Graham" - Transcript

Interview

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MR. SMITH: With us now, South Carolina Republican Lindsey -- Lindsey Graham. Senator Graham has been a critic of the president's stimulus plan.

SEN. GRAHAM: Yes, I have.

MR. SMITH: Good to see you, Senator.

SEN. GRAHAM: Good to see you.

MR. SMITH: That's more about -- is that about ideology? Is that fundamental principles, the reason that the Republicans are standing up? Or are Republicans saying, "Not so much a believer in big government being able to solve all the world's problems, and after you Democrats try it with your big government, we're going to be here ready to clean up your mess"?

SEN. GRAHAM: I -- just speaking for myself, we needed a stimulus package, but $787 billion was too large, unfocused. Most of the money doesn't hit the economy in the first 18 months.

Every Republican voted for a $440 billion stimulus package. It's not like we're skinflints. It had tax cuts for businesses, it had tax cuts for families, extension of unemployment insurance, and infrastructure money. It had a lot of spending to create jobs.

The package I voted against had major policy changes. It doubled the size of the education budget for the next two years -- and it will never come back down -- and had $89 billion for Medicaid, when all you need is 11 billion (dollars). It had a lot of big government, not job creation, and that's why I voted no.

I'm for a stimulus package, not growing the government up.

MR. SMITH: You said seconds before the commercial ended that we're in a recession, that a depression is possible but not likely.

SEN. GRAHAM: No, I don't think we're going to go into a depression unless we make every wrong decision possible. (Chuckles.)

MR. SMITH: I was going to ask you what --

SEN. GRAHAM: Yeah. (Laughs.)

MR. SMITH: -- what wrong decisions would be necessary?

SEN. GRAHAM: Keep throwing good money after bad.

AIG is a big insurance organization --

MR. SMITH: The biggest of them all.

SEN. GRAHAM: The biggest of them all. We spent $160 billion trying to save this organization. It's worth a billion (dollars).

MR. SMITH: We spent 160 billion.

SEN. GRAHAM: Right.

MR. SMITH: It's now worth a billion.

SEN. GRAHAM: Right.

MR. SMITH: And they want many, many, many billions more.

SEN. GRAHAM: They lost 60 billion (dollars), coming -- they're going to announce 60 billion in losses.

So here's what people in South Carolina -- and I'm not a finance guy. I'm not a Wall Street guy. I'm a common-sense guy from South Carolina.

MR. SMITH: You can't even get the color of barbecue sauce right. But go ahead. (Chuckles.)

SEN. GRAHAM: That's exactly right. I've got many flaws. But I do have common sense.

Is it wise to continue to throw money at this company? What would be the consequence of going into bankruptcy, to the general economy, versus just continually funding this AIG company? If you can convince me that we have to keep giving them money to avoid a major meltdown, that would make sense. But no one has given me the data to tell me that if you don't give them a bunch more money the whole country's going to collapse. I'd like to know why we should give them more money.

MR. SMITH: We've given Citigroup more money than they are now valued by Wall Street.

SEN. GRAHAM: Absolutely.

MR. SMITH: Do we give Citibank more money? Or is Citibank allowed to go into bankruptcy?

SEN. GRAHAM: There are 19 banks that are going to go through a stress test. And after the stress test is over, we'll know more about these banks.

Bank of America looks like it's performing pretty well.

Citigroup -- I don't know -- I think 45 billion (dollars) -- stock value's about 15, 16 (billion dollars). We've got preferred stock interest in Citigroup. That means that we get interest on our money. That's a good deal for the taxpayer. We're about to convert it to common stock, which means that we lose our advantage in terms of being a creditor, and we'll own 40 percent of the bank. If we convert the preferred stock to common stock, the taxpayer loses his place in line and we become a 40 percent owner.

My question about Citigroup is, if it's too big to fail, which I think it is, how much more money do you throw at it before you come to the conclusion it's insolvent rather than just has structural problems?

MR. SMITH: You were on this program months ago and we asked these same questions, and there was no answer then, and it seems there's no answer now.

SEN. GRAHAM: And we're about $250 billion into this thing. The Japanese --

MR. SMITH: We don't have 250 billion (dollars).

SEN. GRAHAM: No, we don't.

The Japanese kept throwing good money after bad for a decade. There has to be some other alternative rather than just continually printing money.

We've doubled the money supply. The Federal Reserve is talking about unlimited funds to these banks. That will create inflation over the time. I am all for keeping this economy together, helping banks, because we need them. I'm all for protecting shareholders. But I'm not for throwing good money after bad.

MR. SMITH: Senator Graham, a Republican, thank you.

SEN. GRAHAM: Thank you. (Chuckles.)

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