Gov. Mark Sanford about "savior-based economy"
Mark Sanford talks on CNN about the stimulus package. (Published on February 9th, 2009)
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- So let me ask you, as this debate goes forward, right now about $4 billion would come your way in South Carolina -- $2 billion in tax cuts to your people, $2 billion in stimulus spending. Some of that money you would have control over. Would you say on this morning, keep it, Mr. President, I won't take your money? Because you think this is so flawed?
SANFORD: I think that ultimately, we'll decide that question when we get to it. But the bigger point right now is trying to wake up the American public, as Senator Shelby was doing just a few moments ago, to the fact that if we go down this road, I believe it has disastrous consequences not just for the economy of South Carolina, but frankly, the economy of the nation.
KING: So what should be done, Governor? And I said that I want to bring up, your state unemployment rate is 9.5 percent. Here are three counties in your state, Allendale, Marion and Chester, where the rate is 19.7, 19, 17.3. What, if you don't want the federal government to spend all this money, what about these people out of work? What should be done for them? SANFORD: Well, I would say what was interesting is the Congressional Budget Office report itself that said in the long run, we'll have a slower rate of economic growth if this stimulus bill goes through than if we didn't. So I would say you got to focus on the things that have long-lasting impact in those three counties, or frankly across our state, or, for that matter, across our country.
A problem that was created by building up of too much debt will not be solved with yet more debt. And so, I think you have got to look at the notion of economic development or economic activity much more broadly than borrowing money to print checks and send those checks out of Washington, D.C.
You've got to look at something like card check, you've got to look at trade policy, you've got to look at tax policy. You've got to look much more broadly on the foundational setting to economic development.
KING: Most mayors and most governors, even Republican governors -- they might quibble with this provision or that provision -- but most mayors and most governors want this money and they say it's urgent to pass a big stimulus bill. You have said no.
KING: Governor Rick Perry of Texas has said no. What makes you right and just about everybody else wrong?
SANFORD: I would say a couple of different things. One, we're moving precipitously close to what I would call a savior-based economy. And a savior-based economy sort of is definitional of what you see in Russia or Venezuela or Zimbabwe or places like that, where it matters not how good your product is to the consumer, but what your political connection is to those in power.
And if you think about the power that's been granted to the Fed or to the Treasury, it has savior-like qualities. Everybody knows that we're an economic slowdown, but -- but the consideration now is, if I can just get my word, if I can be a plaintiff to the right person in Washington, D.C., I can get this thing fixed.
That is quite different than a market-based economy, where some rise and some fall, but there's a consequence to making a stupid decision. And a lot of people who've made very stupid decisions are being bailed out by the population at large and, one, from an equity standpoint, it really grates them -- on them, and, two, what they know from the annals of history is that these kinds of things don't work.
And we can look at other places around the globe, or we can look at examples even in our own country. If you look in the late 1920s and the early 1930s, we tried this same approach, the stimulus. What's not remembered is that the Hoover-era projects of the Golden Gate Bridge or the L.A. aqueduct system or the Hoover dam were stimulus projects designed to get the economy going, and they didn't.
If you look in the 1990s at Japan, same kind of stimulus approach tried, but it was a lost decade in Japan. You can look at both history and the examples of other countries to say that this particular track that we're taking, again, as Senator Shelby just mentioned a moment ago, is an example that has not worked well based on history.
And so I'd say history is with us, as well as a lot of economic data that says, wait a minute, if you're at a trip -- at a tipping point with regard to debt versus GDP, you could quickly go over the edge wherein folks decide not to buy Treasuries and we look at a run on the dollar that would undermine every bit of stimulus that's been taken to date.
KING: Let me ask you, lastly, then, Governor, before we let you go. You talked about those Hoover-era examples; let's talk about current-day examples.
I've been down to see you many times in your state, as you know, and you had once a thriving textile industry that was the envy of the world and the envy of the country. Most of it's now gone because of changes in the economy.
Are you saying that, like the textile industry of South Carolina, the shrimping industry maybe down in the Gulf Coast, and the auto industry that is now feeling the pain in Middle America, and some of banking industry on Wall Street, that they have to go? If they have not made the right decisions, then let them fail, even if -- even if tens of thousands of people will suffer the consequences by being thrown from work?
SANFORD: Yes. What I'm saying is, Adam Smith's so-called process of -- of creative destruction is a painful one. But the -- the choice is a much more painful one, wherein we have a politically driven economy.
And people are talking of the word "nationalization" these days when they talk about a number of banks, wherein the same entity that ran operations with Hurricane Katrina down in the gulf would be the same entity -- the federal government -- that would be running banking operations across this country or a whole host of other businesses.
Given the example that we've seen in Katrina and given the example we've seen in a lot of government programs that haven't worked so well, we believe -- or I certainly believe, with a lot of other taxpayers across my state and across the country -- that that is not the best approach.
Is there pain? Yes. And the real truth that needs to be conveyed to the American public is that debt grew at three times GDP or three times the economy over the last 15 years, and we're going to go through a process of deleveraging, and it will be painful.
The question is, do we apply a bunch of different Band-Aids that lengthen and prolong this pain, or do we take the Band-Aid off? I believe very strongly, let's get this thing over with. Let's not drag it on, as Japan did for 10 years and as we saw in the Great Depression, as things got drug on, in many cases because of well intended and well meaning, but ultimately disastrous government programs.