Meet The Press: Treasury Secretary Henry Paulson

Treasury Secretary Henry Paulson gets grilled by Tom Brokaw — live from Beijing.



Running time, 07:36 minutes

Thank to VJ for alerting TBP about this this video, who posted the following comment:

"Brokaw repeatedly splashes Paulson in the face with reality on this morning’s Meet the Press: * Tells him the stimulus checks that his Treasury sent out "had about as much effect as a BB gun on a bear". * Displayed his ‘CONTAINED’ quote up on the screen, "I don’t see [subprime mortgage market troubles] imposing a serious problem. I think it’s going to be largely contained." * Showed the video of Chimpy saying that "Wall Street got drunk". Paulson said that in 5 months, he exits, stage Right."

Who knew Brokaw had the stones to grill a senior politico?

UPDATE: August 10, 2008 7:12pm

It looked much harder hitting on NBC than it does on the web. There were more pull quote — they all looked rather foolish. Perhaps that gave the audio interview a tougher appearance than warranted

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What's been said:

Discussions found on the web:
  1. BG commented on Aug 10

    No different than other interviews I have seen “Hank” Paulson in…he is running for the freaking hills come January 19th, ’09.

    That is a little bit scary in that he may now know that the real financial tsunami has not yet reached our shore (if you can believe that premise) and wants to make damn sure he is not around when it does.

  2. larster commented on Aug 10

    An interesting question is how many compete nt career professionals are left at Treasury to pick up the pieces and move on when these clowns leave in 09. I can’t imagine someone trying to explain Fannie an d Freddie issues to McCain.

  3. shtove commented on Aug 10

    Half an hour of stuttering? Is it worth listening to?

  4. Marcus Aurelius commented on Aug 10

    “Who knew Brokaw had the stones to grill a senior politico?”

    _____

    After the past 8 years, I’m shocked that he or any of his peers have the stones to continue claiming to be professional journalists/reporters/newscasters…

  5. Joshua commented on Aug 10

    This was a grilling?

  6. bdg123 commented on Aug 10

    Those were some small stones re the interview. Definitely not up to MTP standards. But, it’s better than the softballs Brokaw is used to lobbing. I have contacted the White House and asked that the President consider accepting Hank’s resignation and replacing him in memoriam with another Hank – Hank Nastiff. Better know as Hank the angry dwarf. At least Nastiff would be honest and tell us all to get drunk and wake up in five years. That’s about the best economic advice I could imagine.

  7. ssm commented on Aug 10

    Brokaw has ALWAYS had the gonads to grill a senior politico when that politico is a Republican. Where the hell have you been, Barry?

    PS – I can’t stand Paulson and am thrilled at the interview, but I wish Brokaw et. al. in the press would start grilling both sides with as much vigor. If they did, we might not be in nearly the mess we are.

  8. sysin3 commented on Aug 10

    So what, exactly is Paulson’s competence ?

    He always sounds as dumb as a box of rocks.

  9. btw commented on Aug 10

    Not much of a grilling, IMO. I think Tim would have delivered a tougher interview.

  10. Brokawed commented on Aug 10

    Tom Brokaw and NBC are a disgrace to respectable journalism. The commenters on this sight need to cheer up and quit being so depressed. Where’s all this negativity going to get you? Have a drink and loosen up a little.

  11. KnotRP commented on Aug 10

    Two words: whiffle ball. No bbq. Not even a match,
    since he chose not even to directly answer the whiffle
    balls.

    But did I hear right?…1.5Trillion of the 5Trillion GSE debt is on stuff outside the US? WTFIT?

    And not a single question about wiping out the current shareholders, nor giving the current bond holders a hair cut such that their investment return more closely matches that of an explicitly backed enterprise, instead of getting non-backed enterprise sized returns (too much)?

    “We’re bailing them out because we’re gonna need them?”

    Really?

    Why not do it like the FDIC. Close it on Friday, wipe everyone out, fire the lead managers, open it up on monday with the word “Federal” inserted somewhere.
    I’m going to guess that’s because someone very big
    and very important is holding the debt, right? right.

  12. KnotRP commented on Aug 10

    No no no…not “hold the debt”…meant to say “holding stock, options, bonus plans, and preferred shares, along with sweet jobs and perks”. Maybe some of the debt too, since they probably knew it’d be backed by tax payers.

  13. KnotRP commented on Aug 10

    Calculated risk as a link to the 49 minute version…so there is more?

  14. NOR commented on Aug 10

    HE KNOWS HE IS LYING

    THATS WHY HE IS STUTTERING

    ANY PERSON CAN SEE THAT

    HE SHOULD BE PROSECUTED AND SENTENCED

  15. Lance Spore commented on Aug 10

    It’s moments like these when we miss the transparency of John Snow. In any event, Paulsen is a marvellous spokesmen for Republican Economics.

  16. Simon commented on Aug 10

    See the left shoulder twitch at the start of the interview as Tom B warns him to brace for in your face bad news? He hates the situation he’s in. Having to justify desperate action in the face of desperate circumstances.

    I know i’d hate to be pulled in for an interview about whats happening at work when I’m on holiday. I’d have to be paid really well for that.

    He’s a spokesman, a PR man, a mouth, he hopes the policies he’s articulating work out.

    How many times did he mention a bottom in housing? Thats what they are hopping for. That the situation will not get to hard to manage before housing bottoms.

    What will they do to insure that they can manage the situation? They will print money to prop up housing. Look out wage price spiral heading your way fast.

  17. Owner Earnings commented on Aug 10

    BR, check out the interview with Bush on NBC.

    It was the most laid back and forthcoming I’ve ever seen him.

    PS: Having to enter word verification for every comment is ANNOYING and probably deters a lot of people from commenting.

  18. Mr Bubbles commented on Aug 10

    Here’s the full transcript:

    http://www.msnbc.msn.com/id/26123239/

    I wouldn’t exactly call this a grilling, either. There were many instances where pointed, pressing follow-up questions could have been asked of Paulson, and Brokaw missed the opportunity.

  19. Attila Hooper commented on Aug 10

    1:44 “I’m told the biggest part of the housing correction is behind us”. Sing it Paulson.

    Brokjaw is a strawman, and HP is a pigman for GS and their buddies.

  20. AGG commented on Aug 10

    Whenever Paulson says “We’re right behind you”, make sure he isn’t standing too close.

  21. Gary commented on Aug 11

    Socialism for the rich, sweet fuck all for the rest. Bend over and take it like an American.

  22. Oil Shock commented on Aug 11

    Barry,

    Brokaw smooched Paulson’s bottom, you call that grilling?

  23. Barry commented on Aug 11

    I guess compared to the sweetheart softball interviews he gets on CNBC it is!

  24. Scott in Chicago commented on Aug 11

    Aaah…reaffirmation that Hank’s a tool. It was nice to see someone query Paulson that wasn’t so star-struck and deferential that they are rendered incapable of a follow up for clarification. Unlike most of the biz newsies I suspect Brokaw’s panties remained dry throughout the course of the interview. Though I didn’t see anything close to an outright grilling…

  25. John commented on Aug 11

    This almost universal dissing of Paulson is bizarre. Other than Gates he’s the only adult supervision in the Bush administration. Yep he bailed BS and F/F, and made optimistic statements a few months back. What the hell was he supposed to do? Make speeches about just how parlous the situation was, the dollar was massively overvalued, etc. etc. At times some of the comments here sound like those you expect to find at some of the nuttier political sites. No it’s not all over yet but for the moment this guy and Bernanke have essentially slowed if not stopped the bleeding by providing a canopy under which folks can get their house in order without a complete catastrophe. I know many here seem eager for bankers and brokers to be jumping out of windows from what motives it’s hard to discern. Schadenfreude, nihilism? Fortunately it doesn’t look as if it’s going to happen pace dollar and markets. Yes we’re going to have a recession lasting until late next year probably but the fact it’s not turning into a re-run of 1929 is principally due to this guy and Ben. Show some respect for competence.

  26. Scott in Chicago commented on Aug 11

    John, you offer food for thought. My problem with Paulson’s activities of late is that he’s serving his old corporate chums first. It’s the same reason Cramer had his moment; to protect his pals. I sincerely think Paulson is a tool. Bernanke not so. Bernanke inherited a bubble rollover mega-screwgie and has played that craptastic hand about as well as one could expect. Unless, of course, one would prefer to see the system cleansed, the players chastened, etc. Personally I am more in the camp that says screw ’em all; the moral hazard camp. But that’s just me. Again though, you definitely make a valid point re: the glee and vigor with which many, myself included, attack these guys.

  27. Tom Brokaw commented on Aug 11

    Full Transcript:
    http://www.msnbc.msn.com/id/26123239/page/

    MR. TOM BROKAW (Beijing): Our issues this Sunday: All eyes on Beijing as the 2008 Summer Olympics get under way. The United States and China, where do they go from here?

    And back at home, the economy, the stock market, the housing crisis–all challenges for this man, our guest here in Beijing, U.S. Treasury Secretary Henry Paulson.

    Then, jobs and the economy also front and center in the race for the White House.

    Mr. Paulson, thank you for being here. I, I know you’re on a family vacation, so we’re very grateful for you taking this time.

    SEC’Y HENRY PAULSON: Tom, it’s good to be here with you.

    MR. BROKAW: Let me also say I know you’re a sports fan of a certain age. Remember the old Joe Louis line about one of his opponents, “He can run, but he can’t hide”? You can come all the way to Beijing, but you can’t escape what’s going on at home. So I’m going to share with you and with our viewers some of the more tough news that we’ve heard this week. Freddie Mac lost $821 million in the last quarter, and then Fannie Mae reported a loss of $2.3 billion. These are the government-sponsored mortgage agencies. On July 20th of this year, you told my friend Bob Schieffer on “Face the Nation,” “Well, I think it’s going to be months that we’re working our way through this period. Clearly, months. But remember, the long-term fundamentals are very solid.” After what we heard from Freddie Mac and Fannie Mae this week, have you changed your mind about how long it’s going to take to get out of this?

    SEC’Y PAULSON: No, I think what, what I said to Bob Schieffer is, is, is consistent what I, what I believe today. I, I believe that we, we have got some serious issues we’re dealing with in our economy, and, as I said to him, I believe that it’s going to take us well beyond the end of the year to work through the housing–all of the housing problems. But I think the key question is when will the largest part of this housing correction be behind us? Because until the biggest part of the housing correction is behind us, we’re going to continue to have turmoil in our capital markets. And I think the housing correction is really at the heart of our economic problems as a, as a nation right now. So, again, I think given that Fannie Mae and Freddie Mac are solely involved in housing–that’s their sole business–and given the magnitude of the housing correction we’ve had, it, it, it’s not a surprise to me to, to see those, those losses.

    MR. BROKAW: You have the ability now to insert money into Freddie Mac and Fannie Mae. Do you think that that’s going to become necessary, given the size of these losses?

    SEC’Y PAULSON: Well, we have no plans to insert money in, in, in, in either of those institutions. I, I think it was very important that we get these temporary backup facilities because Fannie and Freddie are very important to our capital markets broadly. There’s $5 trillion of securities that they have outstanding–$3 1/2 trillion in the U.S., a trillion and a half outside of the U.S.–and they’re responsible for funding about 70 percent of the mortgages in the United States today. And so a key to our getting through this, this housing situation, this housing correction and getting some stability is that we continue to have mortgage financing available.

    MR. BROKAW: Those two agencies were not well known to most taxpayers in this country…

    SEC’Y PAULSON: Yeah, yeah.

    MR. BROKAW: …until the housing crisis hit.

    SEC’Y PAULSON: Right.

    MR. BROKAW: But we also know that they were caught in some significant accounting irregularities. They changed the management at the top; now they’re both hemorrhaging money. You do have the authority to bail them out if it becomes necessary. But a lot of taxpayers are saying, “Why should I have to foot the bill for this?” I mean, there are wealthy investors who bought these bonds knowing that the government would not back them. Now, suddenly, they’ve got a fail-safe arrangement with the Treasury secretary.

    SEC’Y PAULSON: Well, I’ve heard a lot of those same comments, and what I say to all those who make the comments to me is I say to them, you know, this was not a pleasant task for me to go to the Congress and ask for these backup facilities. Matter of fact, it was a very unpleasant task. But it was an easy one because it was better than the alternative. These institutions are right now critical to the stability of our capital markets, and they’re critical to us getting through this, this housing situation.

    And I would like to point something else out. In addition to these backup powers we have, these backup authorities, what we have now is a legislation calling for a strong new regulator with real powers to deal with, with capital adequacy, to deal with systemic risk. And the issue we’ve had, Tom, is, for some time, people in Washington have looked at these government-sponsored entities and on one side people have said they are really significant risks. Others said there weren’t significant risks, and for, for, for many, many years nothing was done. And we now have a new regulator with very strong powers. The Fed is going to have a seat at the table. And so, in addition to working through this period of turmoil, we’re in a position where the country will now be able to focus looking ahead at the systemic risk, and I, I think it’s going to be very difficult for someone to argue there isn’t systemic risk.

    MR. BROKAW: But will those two agencies have to be fundamentally reorganized in a completely different way? Some people were saying we just ought to nationalize them and forget the idea that they’re kind of a semi-public or semi-private agency.

    SEC’Y PAULSON: Tom, I’ve heard a lot of that, and, and some of these ideas are–involve enormous changes. And I think that the focus today needs to be on stability, getting through this period of turmoil, getting through the housing correction. But there will be discussions when, when, when–with a new regulator in place and looking at systemic risk, there will be discussions about structural issues, and while, while there should be looking ahead.

    MR. BROKAW: At Freddie Mac, the risk manager in 2004 went to the chairman, Richard Syron, and said, “Look, we’ve overextended ourselves here.” Sent him a memo in fact.

    SEC’Y PAULSON: Yeah.

    MR. BROKAW: Syron said, “I have no choice but to continue with this.” Now the other day when he reports these big losses, he said, “Well, we were just caught in the market downdraft,” or words to that effect.

    If Mr. Syron were working for you in your old job at Goldman Sachs, would he still have a job?

    Click for more from ‘Meet the Press’
    Watch the full netcast

    SEC’Y PAULSON: Well, I, I, I don’t think I should hypothesize. What, what I should say is that these organizations, for some time, people have looked at them. And people, really, in, in both parties have looked at them and said, you know, “They’re an odd construct.” And, and Dick Syron has said that. They’ve got on one hand responsibility to their shareholders, on the other they’re government-sponsored entities. They haven’t had an regulator with the necessary powers. So I would like to look forward and say we can take some satisfaction in, in the fact that we now have a regulator that is going to be able to begin to deal with these systemic issues.

    And to the American people, all I can say is that the stability of our capital markets is very important to you. What’s going on in our economy is, is going to be determined to, to a large extent by the speed with which we get through this housing correction, and when we see–when we begin to see more stability with regard to home prices. And it’s very important that Freddie Mac and Fannie Mae continue to play their very important role they’re playing right now in funding so much of the mortgage financing in this country.

    MR. BROKAW: I think what, I think what puzzles a lot of people, Mr. Secretary, is that how so many smart people can not have seen some of this coming.

    SEC’Y PAULSON: Right.

    MR. BROKAW: Here’s a quote from you in April of 2007. “I don’t see subprime mortgage market troubles imposing a serious problem. I think it’s going to be largely contained.” That was a year ago at this time.

    SEC’Y PAULSON: Right.

    MR. BROKAW: The former chairman of President Bush’s Council of Economic Advisers has been critical. Said, “This looks like the Fed and Treasury were lurching form crisis to crisis, when much of this was forecastable.”

    SEC’Y PAULSON: Well, let me say this. Hindsight’s 20/20. A year ago, it was August, we were in the middle of capital markets, dealing with the turmoil of the capital markets. I think from the time I came to Washington, I began to prepare to deal with turmoil in our capital markets. With regard to Freddie Mac and Fannie Mae beginning in, in–right after I arrived in 2006, I, I got permission from the White House to begin to really engage in trying to get reform. There were people–there were two camps. There was one camp that said, “We need reform,” and there was another camp that said, “You’re not going to get reform,” and there was no compromise. And so I started working in late 2006, started working with the House. And, Tom, I think I’ve been very consistent throughout this housing problem in saying to Congress, you know, the–as important as some of the other legislation is, that these two agencies, the need for reform here is an order of magnitude more important than, than any of the other housing issues. We need stability in that marketplace, and we need a strong–and, and, and a strong regulator. So I, I believe I’m essentially playing the hand that I’ve been dealt in terms of Fannie Mae and Freddie Mac. This problem has been going on for many, many years, and it’s my lot in life to deal with it in a way in which is going to, I think, provide stability. And our capital markets have put us in a position to deal with systemic risk going forward.

    MR. BROKAW: Beyond Freddie Mac and Fannie Mae, President Bush, in an unguarded moment recently–he thought the cameras were off, he was talking at a fundraiser in Texas. Here’s what he had to say about how Wall Street got in trouble.

    (Videotape)

    PRES. GEORGE W. BUSH: There’s no question about it. Wall Street got drunk. It got drunk, and now it’s got a hangover. The question is how long will it sober up and not try to do all these fancy financial instruments.

    MR. BROKAW: Listen, I know personally that you’re a teetotaler, so you may not approve of that metaphor, of Wall Street gotting–getting drunk, and you’re an old Wall Street guy yourself. But isn’t it–not just for Wall Street, but for the entire country, we were on a binge?

    SEC’Y PAULSON: Absolutely. There’s a lot of truth in what the, what the president said. And in terms of Wall Street, there is too much leverage in the system, and more leverage than was appropriate, and more than, than people recognized because the leverage came in, into the system in the form of highly complex, structured products which were difficult to understand. So there is excess leverage, excess complexity. And, Tom, one of the things we’ve been working on with, with the president’s working group on financial markets, and that’s a group that I chair where we have all of the regulators–we have the Fed, the OCC, the SEC–we have, of course, one priority, getting through this period with as little damage, as little negative impact as possible on the economy. But, but the second part is to take steps to reduce the likelihood of, of these sorts of things happening in the future. And so we have a number of recommendations to deal with hoping that these things working so that these problems won’t happen again. And, for instance, we have a regulatory system that is very outdated. It was put in place many years ago, and…

    MR. BROKAW: There’s going to have to be more modern regulation…

    SEC’Y PAULSON: Yes, absolutely.

    MR. BROKAW: …of Wall Street across the board.

    SEC’Y PAULSON: Across the board. More modern regulation and more authorities.

    MR. BROKAW: Tough for a Republican who comes from Wall Street to say that?

    SEC’Y PAULSON: Well, I’ve got to say, it’s not tough for me. I understand the importance of regulation, and I also understand the importance of moral hazard, market discipline. Because we need to be in a, in, in a position where organizations are not considered too big to fail. We need–and in order to be in that position, we need to be–to have authorities that allow us to unwind a financial institution if it fails and it is not a bank with Federal deposit insurance. And so we’re going to need those kinds of authorities, and we’re going to, to also need to do a lot of work to get the system in balance.

    MR. BROKAW: Mr. Secretary, this goes well beyond the shores of the United States, obviously.

    SEC’Y PAULSON: Right.

    MR. BROKAW: The Financial Times had a long analytical piece recently, and the bottom line was, in effect, when the United States gets sick, the rest of the world now gets flu. Here’s what they had to say. “The world economy is in trouble, poised between the rock of recession and hard place of overheating. It will take a remarkable resumption in global policy co-ordination and a huge dose of luck to avoid one or the other.” At a time in the United States when we have a lame duck president, a Congress running for re-election and concentrating on that primarily, and two candidates running for president who don’t want to talk about inflicting pain on any of the consumers or the taxpayers in the country, is it hard for you, then, to generate that kind of global coordination that is necessary?

    SEC’Y PAULSON: I, I–Tom, I think we’ve got excellent global coordination. What I explained to so many of my friends from the private sector, although we have a regulatory system that is out of date, and although the architecture we have globally is out of date, we have good people in the seats, and I think in some ways, that transcends the financial architecture because there’s great communication, and we’ve worked very closely with the G-7, with the financial stability forum on the policy prescriptions to, to avoid these problems going forward. We’ve worked very, very closely together, and I know the Fed has worked very closely with their counterparts around the world to, to deal with the financial turmoil. So we’re working closely together. I would say that in the first signs that the economy was slowing down in December, the president asked me to work with–closely with Congress on the stimulus bill. And, again, this was enacted very quickly, and if you look at the numbers for the second quarter, you can see that, although it was a tough second quarter, there was, there was growth. And when you look at consumption and you look at consumer spending, I think that that, that program is working the way it was, it was intended to work. So we’ve, we, we’ve got a lot we’re working on right now.

    MR. BROKAW: I know you had a conversation recently with the Democratic candidate for president, Barack Obama–we presume he’ll be the nominee. There’s been a lot of speculation that you may stay on, whoever’s elected president, as Treasury secretary, because you’re midstream in some profound changes. Would you like to stay on?

    SEC’Y PAULSON: No, Tom, I wouldn’t. I’m, I’m, I, I care a lot about this country. I’m going to run right up until the end. I’m very, very focused on doing the right thing for the United States of America. And whoever the next candidate is, whether it’s John McCain or Barack Obama–the next president is–I will do everything I can to make for a smooth transition, to work closely with my successor in Treasury to do everything I can to help out. But I’m, I’m, I’m focused on getting everything done I can get done between now and January 19th.

    MR. BROKAW: That’s a firm denial that you would be interested in extending?

    SEC’Y PAULSON: Yeah. It couldn’t be any firmer. I, I’ve–you know, when I came down to Washington, people said to me, “How could you want to do something for just two and a half years?” And I said, “Two and a half years sounds like a long time to me, and I’m going to–I, I’m going to define my job expansively. I’m going to do everything I can to step up to any problems that, that are going to face the country.” But again, I, I look forward to doing other things, you know, next year.

    MR. BROKAW: I want to ask you about what may be additionally necessary to get this economy going again. The tax rebates that were sent out earlier this year had about as much effect as a BB gun on a bear, it turns out. Do you think we’ll need additional stimulus from the federal government?

    SEC’Y PAULSON: Well, Tom, I’m going to take exception with the BB gun on a bear, because I, I believe what we did with, with, with, with the tax rebates and the business incentives, we got them out very quickly. And they’re still, you know, they’re still having an impact. So I think if you look at the second quarter numbers, that’s what people–when we put that plan in place, people were worried about negative growth in the second quarter.

    Now, in terms of a second stimulus, which is, which is your question, we sized that program to say, “How could we do something that would be meaningful this year but not so big that it would jeopardize some of our long-term priorities and our fiscal priorities in balancing the budget?” So, again, my view would be let’s see how this program works in the third quarter. And the biggest issue we’re dealing with right now is housing. And so we, we’ve got housing legislation. We’re working with Freddie and Fannie. We have this Hope Now Alliance where the industry’s come together to avoid preventable foreclosures. And I think that’s where our priorities should be.

    Click for more from ‘Meet the Press’
    Watch the full netcast

    MR. BROKAW: Let’s talk some about China. You’ve made more than 70 trips here, both as a public and as a private citizen. Chinese government has a huge investment in the United States. They’re holding what, $400 billion worth of, of bonds in Freddie Mac and Fannie Mae alone? Here’s a quote that you offered to BusinessWeek recently. Your counterpart in this country, the vice premier, Wang Qishan, said, “We’ve been listening a lot to you and now we find out our teacher has problems.” You said that you responded to him, “Learn from us and you can avoid some of our mistakes.” There’s a prominent American businessman who is here this week, who met with some Chinese officials. They were very concerned about Fannie Mae and Freddie Mac. And he said their attitude is they’re going to sit on their money. That doesn’t help us, does it?

    SEC’Y PAULSON: Well, I, I, I would say this, Tom. We have had, I believe, great support from investors around the world. And part of the reason why I was–when, when I talked with Congress about the need for these backup authorities with regard to Fannie Mae and Freddie Mac was I emphasized this is about our capital markets, and investors all around the world need to know that we understand the importance of these organizations to our capital markets and to, to housing. But the–you’re, you’re right that, that, that, that the period of turmoil we’re going through in our capital markets today is different from some of the periods we’ve had in the past in that the, the root cause took place right in the United States of America rather than outside of the United States of America. So, in some ways, that’s humbling. But I still believe that the long term–and I think most of the people I talk with, whether it’s the Chinese or whether it’s in the Middle East, I think just about every investor outside of the United States looks at the U.S. and says, you know, relative to any other developed or industrial economy, that the long-term fundamentals–economic fundamentals of the United States compare very favorably. And, and let’s not forget that. We’ve, we’ve got our problems, but when we have a problem, we shine a light on it, we move quickly to clean it up, and I can’t think of any other nation that, that doesn’t have more problems than we do longer term.

    MR. BROKAW: Let’s talk about China and energy and pollution.

    SEC’Y PAULSON: Yep.

    MR. BROKAW: The World Bank now estimates that 750,000 Chinese die annually…

    MR. BROKAW: …from the effects of pollution in this country. It’s a big interest of yours…

    SEC’Y PAULSON: Yep.

    MR. BROKAW: …I know. They are building one coal-powered plant a week.

    SEC’Y PAULSON: Yep.

    MR. BROKAW: They’re going to add 20,000 cars a day.

    SEC’Y PAULSON: Yep.

    MR. BROKAW: They’ll have 400 million people moving to the city between now and 2025. How do they resolve the conflicting realities between managing that population mass and economic growth and doing something about energy and pollution?

    SEC’Y PAULSON: That is the 64,000 question, and when we–as you know, Tom, I spend a lot of time with our strategic economic dialogue and engaging with China, and this is one of the issues we spend a lot of time on. And, as you so rightfully said, economic growth is an imperative to China. They need to keep growing, and the energy consumption–they use about one third of the, the world’s coal. They burn two billion tons of coal a year in, in, in China. And so our efforts here, and we, we, we’ve launched this 10-year energy and environmental framework in which a big part of our effort is going to be developing and deploying cleaner technologies, which is going to be very important. We can’t solve our environmental issues, the world can’t solve its, its environmental issues without engagement with China and without helping them and all of us working together to solve the issues.

    MR. BROKAW: Let me ask you, as well, about issues that have been getting a good deal of attention during these Olympics. You wrote in the Foreign Affairs Quarterly in a long analysis of what’s going on in China, “Beijing has recently realized some of the unpleasant implications of working outside the global economic system.” They take a lot of oil out of Sudan…

    SEC’Y PAULSON: Right.

    MR. BROKAW: …and, therefore, because they’ve got a huge investment in Sudan and a need for it, they don’t put any pressure on the Sudanese government about what’s going on in Darfur. It’s hard for a lot of people to see how, even though they may have realized some of the unpleasant consequences, that they’re doing anything about it.

    SEC’Y PAULSON: Well, Tom, listen, there’s more they can do in a number of areas, and we, we, we, we clearly need to see more progress here. They, they can make a real difference in Sudan. Now, they have–I will point out that they’ve, they’ve come a ways. They’ve got a company of engineers right there working with the U.N. mission, but I, I, I do think that they could put more pressure on the regime in Karthoum to, to, to work for peace. And I, I think the other thing that, at least in my perspective, I think the Chinese are increasingly saying that there’s a cost to making investments in places like Sudan and Iran, because there’s a, a–an increasingly large political backlash that goes with those investments.

    MR. BROKAW: There’s another big issue here this week, and that is Tibet. The Dalai Lama has extended an olive branch fairly significantly to the Chinese government, saying he hopes that these games go well, that he admires the Chinese civilization. They can continue…

    SEC’Y PAULSON: Right.

    MR. BROKAW: …their communist system.

    SEC’Y PAULSON: Right.

    MR. BROKAW: But he hopes that they can have a dialogue. So far there’s been no response to that. And it’s part of the reason that the Chinese government, in the eyes of a lot of people around the world, remain suspect, don’t seem to be a member of the family of nations.

    SEC’Y PAULSON: Right. Well, the president has had a lot to say on that, and I guess what I would say is that there are plenty of policies that the Chinese government has that we, we don’t agree with, and I don’t think that’s really the relevant question. I think the relevant question is, what can we do to encourage China to continue on their path of reform, to continue to move to open up and to expand human rights, expand freedoms. And they’ve come a long way. You know, I’ve been–you and I were talking earlier. We’ve both been coming to this country for a long time, and the differences are startling. Not just in terms of the economic situation of the people in China, but some of the freedoms now that they enjoy, and their access to information and their access–ability to move around. And so they’re on the right path. And so the question is, how do we get them to move quicker to open up? And I think the answer there is, is engagement.

    MR. BROKAW: You were in that stadium for the opening ceremonies…

    SEC’Y PAULSON: Yeah.

    MR. BROKAW: …which, by anyone’s description, can only be described breathtaking and dazzling and a little terrifying in a way, because you realize how much they’ve done, and this is the country that you’re going to be competing against in the short-term future. A lot of people ask me, “What do you think will happen to China after these games?” I don’t have an easy answer. Do you?

    SEC’Y PAULSON: I have no easy answer, but the one thing I can say to you, Tom, is that those that think that we need to contain or counter China’s economic growth, or that we should be concerned that they’re going to overtake us are worried about the wrong thing, that the best thing that could happen to the United States would have China continue to grow and continue to progress and continue to reform. And the worst thing that could happen would be for China to seriously stumble. And so, again, I looked at what I saw there at the stadium as a symbol of all of the progress China has made as they’re attempting to do something that is really breathtakingly difficult, to move a billion people from a developing country to a developed country. And, you know, we push them all the time to move quicker, to open up quicker, to expand, you know, human liberties quicker and, and, and so on. But I think it’s easier for us to, to, to have impact with them if we recognize how far they’ve come and we engage with them on that basis.

    MR. BROKAW: Mr. Secretary, thanks very much for being here. I hope you have a great family vacation here at the Olympics.

    SEC’Y PAULSON: Tom, thank you.

  28. tom a taxpayer commented on Aug 11

    Paulson is packing his bags to get out of Dodge. Paulson will want to get out before the major investigations, indictments, and prosecutions get underway after a new President is sworn in next January. Paulson will make sure his passport is in good order. His hardest task now is to research which countries do not have extradition treaties with the U.S.

    I wonder if in 2009 Paulson will head the China operations for Goldman Sachs.

  29. VJ commented on Aug 11

    ABC World News reporting:

    “China set to overtake U.S. next year as world’s largest manufacturer, four years ahead of schedule.”
    .

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