Bill Clinton Network Exclusive: Proposes Debt Impasse Deal, but Fears GOP Too Hamstrung by Ideology

Bill Clinton: ABC Exclusive
WATCH Bill Clinton: ABC Exclusive Interview

Former President Bill Clinton sees a possible way past the bipartisan impasse over raising the debt limit: agree to cut spending AND raise taxes, but do neither until later, after the economy improves.

"If they [the Republicans] said, look, that now is not the time for big tax increases to harm the recovery, they would be right," Clinton told ABC News in an exclusive interview at the Clinton Global Initiative America conference in Chicago. "But it's also right to say that now's not the time for big spending cuts.

"What I'd like to see them do is agree on the outlines of a 10-year plan and agree not to start either the revenue hikes or the spending cuts until we've got this recovery underway," Clinton added. "The confidence that the Republicans say would be given to investors with a budget plan, they'd get whether we started this year or next year or the year after that, for that matter."

For the first time, the former president is focusing his Clinton Global Initiative on creating jobs here in the United States. He suggested waiting for the recovery to take hold before pushing spending cuts and tax increases will make the issues clearer.

"We've got to get the jobs back in this economy again," Clinton said. "The more people we get going back to work, the more businesses we start, that'll bring up the revenue flow, and it will cut down on the expenses. Then, we'll see what the real dimensions of our problem are."

Unfortunately, however, Clinton fears Republicans' "ideological conviction" about never raising taxes recalls the lead-up to government shutdowns in the '90s, adding that the pressure on GOP candidates to toe the ideological line could hamstring their bids to unseat President Obama.

"They were in a similar anti-government fever, anti-tax fever in 1995 until, you know, the struggle went on for a year and they shut the government down twice," Clinton said. "The public made a judgment that that was not right. And then we finally broke through. It wound up with the balanced budget act and forced surpluses and real prosperity."

Could the dispute this time push past the Aug. 2 deadline when, officials say, failing to raise the nation's debt ceiling could lead to America defaulting on its loans? Clinton didn't discount the possibility.

"When I passed my budget in 1993, they routinely said it would bring on a terrible recession, [that] it was the end of capitalism as we knew it," he said. "And we had the best eight years in our history. But they just kept saying it. You've got to give them credit. The evidence doesn't deter them. ... It's an ideological conviction. So, I don't know that it can be resolved until there's some break in the action."

Bill Clinton Expects Obama Re-Election: Here's Why

Public opinion, Clinton said, swung against the Republicans when they pushed their anti-tax arguments over the line in the mid-1990s. But the possibility of the same thing happening again isn't the whole reason he believes that President Obama will be elected to a second term in 2012.

"I'll be surprised if he's not reelected," he said. "I've always thought he would be."

For one thing, Clinton believes the economy will be better by Election Day than it is now, though unemployment still will be relatively high and the improvement in the economy won't be as dramatic as the emergence from a shallower recession during his first four years as president.

"The circumstances are different," Clinton said. "When President Obama took office, we were in the midst of avoiding having a financial collapse turn into a depression. So, the unemployment rate was higher and people were scared to death about what was going to happen. The so-called stimulus bill actually outperformed expectations, not underperformed, but it wasn't big enough to lift this whole economy out of the hole it was in. The auto restructuring is working. And I think he'll be able to point to that."

He also believes whichever Republican gets nominated to face Obama will get boxed in by ideology.

"Since they, apparently, ideologically, will not permit their candidates to do some of the things that would be most effective in creating jobs and in balancing budget, I just don't think they'll be able to get away with what they got away with in the election in 2010," Clinton said. "You won't just be able to say, 'Vote for me, I'm the non-Obama.' I think he's going to be able to point to a lot of very specific things that are better. I think that he's going to be able to convince people that it takes a little longer after that kind of collapse to recover. It took Japan a decade to recover. ... We're coming back quicker than that."

Bill Clinton Has Compliments for GOP Contenders

The former Democratic president had complimentary things to say about individuals across the aisle, too -- particularly those in play for the presidency.

"The ones I liked are the ones that you think are more moderate," he said, "'cause I think they're a little more connected to the real world. And I think they'll be-- they'd be formidable. ... But I'm afraid if I say anything nice about them, they'll lose, for sure."

But then, what the heck, he proceeded to say nice things about many of them anyway.

Former Utah Gov. Jon Huntsman, he said, "did a very nice, a good job for America as ambassador to China. I think he's quite an impressive man. He's got an impressive family. I had the honor of meeting one of his children once and having a conversation with her. I think that he's refreshingly, kind of, unhide-bound. Just comes across as non-ideological -- conservative, but non-ideological, practical."

Former Massachusetts Gov. Mitt Romney, he said, is "doing a better job as a candidate this time than he did four years ago. [He] comes across as more relaxed and more convicted about what he did do, less willing to just be forced into apologizing for it because it violates some part of his party orthodoxy."

He claimed not to be surprised by the early success of Rep. Michele Bachmann, R-Minn, because, "I've been watching her speak at some of these conventions on ESPN, you know, she comes across as a real person. ... The story that they tell is pretty compelling, all those foster children she's taken in, and children she's raised and the work she's done."

He also had kind words for his successor as Arkansas governor, Mike Huckabee, as well as other non-candidates Mississippi Gov. Haley Barbour and Indiana Gov. Mitch Daniels, who were attending his jobs conference in Chicago.

"I'm going to do my best to make them better candidates, indirectly," Obama said of the Republican field. "Even though I don't want them to beat President Obama, I'm going to do my best by proving at this conference that there are things we can do to create jobs and that we should all be focused on doing what we can do to make America work. And we should be less focused on spouting, you know, political lines and dumping on each other. All that matters is putting the country back to work. We put the country back to work and prepare for the new century, the rest of this will take care of itself."

Bill Clinton at CGI America Conference: Way Forward on Jobs

To create jobs, Clinton endorsed investing in clean energy to compete with China and other foreign powers, finding ways to get companies to "insource" jobs to rural America rather than outsourcing them overseas, and creating an "infrastructure bank" to rebuild the nation's roads, bridges and hardware.

He also cited an idea proposed at the conference to confront a "so-called skills gap" in America, training workers for specific open jobs "by giving the employers the money to train them first and saying, 'You don't have to hire people. Train them first. Don't train afterward. Here's the money.'"

"There are more than three million posted job openings today," Clinton said. "Those jobs are being filled at only half the pace they were filled in previous recession. ... So just think about it: If we have three million more people working, unemployment would be more than two points lower than it is, and America would be in a very different place psychologically.

"I think that there will be something the president can do with that that won't require a lot of new money, just being extremely flexible about how to take the money we've got and hire people more quickly," he added.

Bill Clinton: Attacks on Health Care Law 'a Total Scurrilous, Crazy Thing'

Clinton rejected the notion among health care law critics that uncertainty created by the law and other recent legislation is bad for business.

"They can't possibly [be] for the current system, unless they don't provide health care to their employees," Clinton said.

The previous health care system was worse for business and the economy, he added.

"What ... people who attack President Obama and the health care law advocate can best be seen in 2009," Clinton said. "There was no Obamacare. The economy was in the total tank -- the worst of the recession. So, what happened? Insurance company profits went up 26 percent. Five million people lost their health insurance, their private health insurance -- under their system, not the Obama system. And three million of those five million went on state Medicaid rolls exploding the government deficits of the federal and state governments. That is the system advocated by the people who are against Obamacare.

"This is a funhouse," he said. "This is a total scurrilous, crazy thing. These people are defending a system that is bankrupting the American economy, that is keeping the American people from getting new jobs, that is keeping the American people from getting pay increases because we have to gobble up $1 trillion a year to a health care system in ways that are unrelated to our health. That's my response to that. Otherwise, I don't have strong feelings about this issue."

Bill Clinton Won't Criticize Obama on Gay Marriage

He seemed more sincere in his desire not to express strong feelings about a handful of other issues, such as whether he thought President Obama missed an opportunity to declare his position on gay marriage openly.

"This is not like a lot of other civil rights issues," Clinton said. "This is really one where I think most people are clawing their way through a thicket of very complex emotional issues, and I don't have any criticism or condemnation of anybody. I'm happy we did it in New York. I'm proud of the governor. I'm proud of the Republicans who voted the way they did. And I think the president has been quite good on gay rights. I'm glad that we got the 'don't ask, don't tell' thing behind us. And I think the country's moving in the right direction."

Bill Clinton: Future Grandpa?

Asked if he was eager to push his daughter Chelsea, married almost a year, into making him a grandfather, Clinton didn't seem to want to touch that one, either.

"My ability to become a grandfather is inversely related to how much I talk about it," he said with a laugh. "Hillary and I, we're very proud of Chelsea, and we genuinely love and respect our son-in-law.

"We'll be grateful if we have grandchildren, but it's none of our business," he said. "It's now their business, and it's out of my hands. And the less I say about it, the better. ...

"[I] don't wanna jinx it, and I don't wanna interfere with it," he added. "I just, one day, hope I get to be a crotchety, old grandfather and have a lot of fun on a floor playing with kids. But that's not up to me."