Tennessee Congressman Talks About the Economic Crisis
Rep. Jim Cooper with Kid Reporter Aaron Broder. (Photo courtesy Aaron Broder)
Jim Cooper represents Tennessee’s Fifth Congressional District in the U.S. House of Representatives. He has served the Fifth District since 2002. Kid Reporter Aaron Broder lives in Rep. Cooper’s district, and he sat down with the congressman to discuss the economic crisis and the $700 billion bailout plan.
Scholastic News Online: Why do you think it’s important to pass the bailout package?
Rep. Jim Cooper: Well, if we aren’t willing to rescue our own economy, who is? The Russians aren’t going to help us. The Chinese aren’t going to help us. Sometimes, economies need help. Warren Buffett, as an analogy, he says the U.S. economy is like a great athlete, but right now he’s on the floor with cardiac arrest. So when you’re being helped by emergency workers, you don’t argue with the patient, you don’t want the doctors and nurses to fight among themselves, you want to cure the patient. And that’s what we should be doing with our economy.
SNO: Do you think that the bailout plan is going to have as major an impact as hoped?
Rep. Cooper: I do. The bailout package gives the Treasury Secretary very broad authority and only recently did he endorse the notion of government ownership of equity in the banks. And that seems to be the crucial point at which the market started regaining confidence. It’s too early to tell, but helping banks with debt was apparently not enough, we had to help them with their equity.
SNO: You don’t think that’s a bad idea to let the government have ownership of some of the banks in Wall Street?
Rep. Cooper: It’s not my favorite thing, but we in Tennessee are used to government ownership of power companies. It’s called TVA or NES. You can have a big ideological fight over these things, but Americans are practical people. We want to do what works.
SNO: And what do you think is the cause of the crisis right now?
Rep. Cooper: The simplest cause is too many people borrowing too much money. Whether that was individual home owners who got too big a mortgage and couldn’t pay it or financial institutions that became overleveraged.
SNO: How is the crisis in New York affecting our district in Tennessee?
Rep. Cooper: Well, Main Street is connected with Wall Street. You’re home mortgage in rural Tennessee is resold within minutes to a secondary market that stretches not only to Wall Street but all around the world. So your home in rural Tennessee probably is financed with Chinese money or Singapore money or French money or Italian money. And for many years we benefited from that. That was a good thing because it pulled a lot of money into U.S. housing and we got better houses as a result, but the downside of it is it’s a fragile system and recently it broke down.
SNO: What do you think we should learn from the crisis?
Rep. Cooper: Not to borrow so much money, live in more modest houses, be prepared to pay your bills on time and have a rainy day fund just in case the unexpected happens. This goes back to Aesop’s fable of the grasshopper and the ant. Who survived the winter? The ant, because he stored up food for the winter. The grasshopper did not make it.
SNO: I heard that this past weekend you were in North Carolina campaigning for Obama. What do you think he’s going to do when President to help solve the crisis?
Rep. Cooper: Well, he’s in a painful position, inheriting a mess. But he’s already shown great leadership on the issue and I think he will continue to do so. He’s calm, he’s focused, he knows a good bit about economics.
SNO: Is there anything else that you’d like to say in general about the crisis?
Rep. Cooper: Well, this is both on the crisis and for young people. Study math, study science, study engineering. Most of these financial crises are mathematically derived and if you don’t understand math, science, engineering, you won’t have a chance to understand what’s going on. The guy who’s been selected by Secretary Paulson to clean up the mess is an engineer who then went to business school, but fundamentally he’s an engineer- he’s a can-do analytical guy who knows how to fix things and we need more of that spirit in this country. So journalism’s great, political science is great, but not nearly as great as math.
Learn more about the economy and how it works in this special report.
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Aaron Broder is a member of the Scholastic Kids Press Corps.