CNBC Business Center

August 6, 2003

HEADLINE: Howard Dean, former Vermont governor, on his bid to become president

ANCHORS: SUE HERERA; RON INSANA

BODY:
SUE HERERA, co-anchor:

And just a short while eye go Ron and I had the chance to speak to Howard Dean on the campaign trail in Iowa. We began by asking about his reaction to the support that he's seen from so many sectors of America.

Former Governor HOWARD DEAN (Democrat, Presidential Candidate): What people want more than anything is a president who's going to stand up to George Bush and not try to be like him. I think—as I go around the country, I find that Democrats are almost as mad at the Democrats in Washington as they are at the Republicans because they're voting for things like No Child Left Behind, for some tax cuts and for a war that wasn't properly explained to the American people. And we—what we're going to need to win this race is to give the three million or four million people who don't vote a reason to vote. That's the only way we're going to win. We're not going to win by being a pale imitation of the president.

RON INSANA, co-anchor:

Now, Governor, you've been harshly critical of President Bush with respect to his economic policy. What would you do differently—or let me put it a different way. What would you—what h—would you have done differently post the stock market bubble, post-9/11, to get the economy going from what had been not only a recession but also a very sluggish growth period?

Dr. DEAN: Well, I think the president has made the economy much, much worse by these enormous $3 trillion worth of tax cuts, if you include the interest. What I would have done is invested that money in America. I have a health insurance plan that's going to help small businesses buy health insurance. We need to develop help for small businesses in order them—to have them accumulate capital. Balanced budgets matter. People have confidence in America when the balance is—budget's balanced. I balanced budgets. No Republican's done so in 34 years. We just need a different president who understands economics. This is the credit card presidency: borrow and spend, borrow and spend, borrow and spend.

INSANA: But let—let me ask you about that be...

Dr. DEAN: The model fiscal...

INSANA: Let—let me just ask you about that because the last time a president tried to balance the budget after a stock market crash, it was Herbert Hoover. And—and it had disastrous consequences. Wouldn't it be the wrong time, given the fragility of the recovery, to balance the budget at this point?

Dr. DEAN: You—sure. You couldn't balance the budget all in a single year, and we don't plan to do that. But to have $3 trillion of tax cuts going to the very group of people that doesn't need the discretionary income makes absolutely no sense at all. Why not create jobs by investing in roads and infrastructure and—and broadband communications so that rural areas can get in on the information boom? Why not invest in renewable energy, something this president seems to have an allergy to, so we can create jobs now and build the infrastructure for future economic expansion?

HERERA: Governor, you mentioned the fact that you think that the president has not helped the recovery at all. Yet we are seeing pretty discernible signs that the recovery is in full effect. The jobs data is lagging behind, of course, but we're seeing better news on the manufacturing front in terms of some of those numbers, and there are parts of the economy that are really coming back.

Dr. DEAN: Oh, I'm not so sure there are parts of the economy that are really coming back. And I'm very worried about a huge construction overhang. There was an article in The New York Times yesterday that talked about mortgage rates. As they go up, people are going to be concerned about the interest rates; the banks are going to have to lay off some of their mortgage obligations. And you saw yesterday a 150-point drop in the Dow Jones because the—a huge increase in interest rates because of the—Treasury came to market for...

HERERA: Well, there are those who would say that—there are those who would say that the drop in the Dow Jones industrial average was also linked to the stronger-than-expected economic data that was out yesterday.

Dr. DEAN: I think it was re—linked to the increase in interest rates, which I think is going to be a huge problem. Look, there's no way of getting around it. You know as well as I do that if you use Argentina as your fiscal model, which is what this president's apparently done, that you're eventually going to get in trouble. We cannot borrow and spend and borrow and spend and borrow and spend forever.

INSANA: All right. What would you then—give us—give us a specific example of how you would move the budget toward balance while building roads, adding broadband to rural areas and fixing health care, as—as you described?

Dr. DEAN: We need to get rid of the president's tax cuts. They were a big mistake, and we should admit that now because they didn't go to the people who were going to spend the money. They would go—they went to the people who have high enough discretionary income, so that it didn't make any difference if they got the tax cut or not in terms of their spending habits. And we have seen those analyses, and I d—suspect that you have as well. So that's $3 trillion we have to spend over a 10-year period if we include interest.

Now a a—third of that—less than a third of that can go into a health-care plan that builds on the existing plan, guarantees that everybody can get health insurance, although they, at the upper end of the income bracket, have to pay for that. Secondly, we then have some other things we can do. We can take some of that money and put it directly into paying back the Social Security trust fund, which is a form of balancing the budget. And thirdly, we can make direct infrastructure investments, for example, in schools that are very, very substandard. And it would work the same way that a rapid depreciation allowance works. You give a—a community three years to rebuild their school using, say, 30 percent federal—extra federal grant. If they don't do it in three years, they lose the potential of getting the grant. It has the same effect on the economy as rapr—rapid depreciation allowance.

HERERA: Governor, on the issue of health care, specifically, how would you reform the system? How would your plan work?

Dr. DEAN: I'd do it the way we did it in Vermont. We—in Vermont, everybody under 18 has in—health insurance; 99 percent eligible, 96 percent have it. Low-income working people have health insurance. I would use S-CHIP, which is a federal program, for o—those under 25. You have the raised reimbursement rates to physicians and hospitals if you do that, but that works and we did that up—for those under 18 and those under 185 percent of poverty. After that, if you don't have insurance through your place of employment, you can buy your congressman's plan, which is a private consortium, for 7 ˝ percent of your adjusted gross income. Make $40,000 a year, you have heart disease, diabetes, you're 58 years old, you can still get health insurance for $3,000 a year. You pay the same as you do—as a healthy 27-year-old. Community rating, guaranteed issue and it works because we—that's what we do in our state.

INSANA: Vermont Governor Howard Dean, on the campaign trail, joining us tonight from Iowa.

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