Transcript: The Great American Debates: 'There's Too Much Government In My Life'

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AMANPOUR: This week -- a special program on the defining issue of 2012. Has Uncle Sam become too big, too powerful? A bailout bonanza, a welfare state? A tax-and-spend Goliath crushing the entrepreneurial spirit when America can't afford to fall behind? That' the rallying cry of the Tea Party, the mantra of Republican candidates everywhere.

GOV. RICK PERRY, R-TEXAS, PRESIDENTIAL CANDIDATE: Washington doesn't need a new coat of paint. It needs a complete overall.

AMANPOUR: At the heart of Ronald Reagan's famous declaration.

RONALD REAGAN: The government is not the solution to our problem, government is the problem.

AMANPOUR: Today, ABC News and the Miller Center of the University of Virginia present, the great American debate. Facing off here in Washington, the intellectual heavyweights of both parties. For the right, Congressman Paul Ryan and ABC's own George Will. And from the left, Congressman Barney Frank and former Clinton Labor Secretary Robert Reich.

Good morning. And welcome to this special edition of the program. Today, we delve into the fundamental question that's facing American democracy at this pivotal moment. Has the federal government become too big, too sprawling? Americans have always been weary of Washington, but this year that anger seems to be at fever pitch, with poll after poll showing trust in government is at an all-time low. But is this because it's too bloated or too broken? And what about this conundrum, people who oppose big government still want to collect their entitlements?

So today we put all those issues to the test. This is of course a debate as old as the republic itself, and the driving theme of the 2012 elections. And ABC's John Donvan tells us why.

(BEGIN VIDEOTAPE)

REP. JOHN A. BOEHNER, R-OHIO, HOUSE SPEAKER: Right now, we have got a government so big and so expensive--

JOHN DONVAN, ABC CORRESPONDENT: You listen to this theme.

GLENN BECK: Big government.

DONVAN: Let's call it--

PERRY: Big government economic policies.

DONVAN: Or maybe rant is the word.

(CROSSTALK)

DONVAN: And how does this not feel as though we're stuck in a time machine? Because didn't we hold this debate already? Didn't Reagan say 30 years ago--

REAGAN: Government isn't the solution to our problem. Government is the problem.

DONVAN: And 15 years ago, didn't Clinton basically concede?

BILL CLINTON: The era of big government is over.

DONVAN: Didn't Thomas Jefferson and Alexander Hamilton come out of the very founding itself drawing America's first partisan battle lines? Because Hamilton had big plans for a strong central government, leadership by an elite, a stretchable Constitution. While Jefferson, he wanted to keep power local and limited and exactly as spelled out in the Constitution, no less and especially no more. Well, guess what? Hamilton dies in a duel, Jefferson becomes president, and then he starts enlarging things, like America itself, buying land rights from France. Like the national debt, which got bigger as the result. And the size of the government? Well, they had to keep adding chairs to the president's cabinet from five in Jefferson's time; the number grew to 7 by 1853; 10 by 1903. Then comes the New Deal.

FRANKLIN DELANO ROOSEVELT: The only thing we have to fear is --

DONVAN: A broken economy, it was government to the rescue. Social Security born, the financial industry slapped with new rules. And the view that it was a good thing to spend to save the system. It touched that thing inside that says, when something's not right, in a Hollywood way that captures it in a line--

UNIDENTIFIED FEMALE: Should be a law against it.

DONVAN: Mae West in "My Little Chickadee." Well, laws we've got. Plenty of them. And rules and regulations and restrictions and limits and codes and requirements. And agencies and boards and commissions and departments that warn and watch and police, and enforce, and inspect and approve or disapprove. Who wants all this? Well, if you needed it, if you needed the federal government to force open the schoolhouse door, if you needed those checks the government handed out after the Gulf oil spill, if you hated the fact that airlines could keep you on the runways for hours until the government told them they couldn't. If you need the parking space that federal law mandates in front of stores, then, well, it's you who wanted it.

Or maybe not. Not when this agency gets into it, because there's a price to be paid for all of this. And maybe we can't really pay it.

(END VIDEOTAPE)

AMANPOUR: And so, today, we step away from the din to debate what American government should do and what it does well. We're here with a live studio audience at the night studio in the Newseum. And with me on this stage, some of the leading lights in American political thought. On the right, House Budget Committee Chairman Congressman Paul Ryan of Wisconsin, and ABC's own George Will. And on the left, Congressman Barney Frank of Massachusetts, who's just announced that this term in Washington will be his list. And Robert Reich, Bill Clinton's labor secretary, now teaching at the University of California Berkeley.

Gentlemen, we have a lot of ground to cover today and we want to leave time for questions, and so we're asking you to keep answers quite tight. And you'll be allowed a moment or two for rebuttal.

We kick things off with brief opening statements. First, Congressman Ryan.

RYAN: Thank you, Christiane. Is there too much government in our lives? Yes. Ask most people and they will agree. It's no coincidence that government spending has hit record levels while people's trust in government has hit record lows. So the longer answer, why is this, is pretty simple.

Too much government inevitably leads to bad government. When government grows too much and extends beyond its limits, it usually does things poorly. Our founders put limits on government because they knew the limits of government.

The left usually likes to advance what I would call a strawman argument or a false choice, that those of us who believe in the constitutional principles of limited government somehow favor sort of a Hobbsian state of nature, or a social Darwinism, where people are left to fend for themselves completely, only to be exploited by the few who are powerful, and that the only alternative to this cruel society is a vision of a society of total security and total outcome, results guaranteed by government.

Fortunately, this is not the case. Those of us who believe in limited government also believe in effective government. A good and popular government is one that respects its limits. Is one that fulfills its goals and its functions well.

But look at where we are today. Look at our economy, look at our debt. Crony capitalism where government is picking winners and losers. Where you have big government and big business exchanging favors with one another while the entrepreneur and the small-business person is left struggling to survive.

The last few years have shown us that a truly effective government is impossible without limits. A government that focuses on equalizing the results of our lives is one that does damage to the American commitment of equal opportunity. If we reclaim our founding timeless principles, we'll have a government that we have faith in, that we are proud of, and the question surrounding the size and the proper size of government will take care of itself.

AMANPOUR: Congressman Ryan, thank you very much. And Congressman Barney Frank, your opening minute and a half.

FRANK: Yes, we have too much government, and yes, we have too little government. There is this mistaken view that says, you know, we have a fight between the people's money and the government's money. It's all the people's money. The question is, as people, intelligently, we have two sets of needs. We have needs that we best pursue individually, with money for ourselves and our families. And we can make personal choices. But then there are things that we have to do together.

I understand the appeal of tax cuts, but in all my years of government, I have never seen a tax cut put out a fire. I have never seen a tax cut build a bridge or clean up toxic atmosphere.

The point is that there are some things where we are inevitably together. We are interlocked in the economy. We're all subject to the same environment, we all have the same public safety needs. And there, I think, we have sometimes had too little government.

On the other hand, and my conservative friends who claim that they are for small government are the ones who tell us that an adult shouldn't be able to gamble on the Internet. We have the leading judicial conservative, Antonin Scalia, absolutely in a snit because you can't be sent to jail if you have personal sexual relations of which he does not approve. We have a series of interventions by the conservatives in those choices that should be left to individuals.

So my conservative friends have it absolutely backwards. I do want there to be regulation so that you don't have the kind of manipulation in the financial area that leads to crises. And I do want to be able to clean up the environment. No matter how rich you are, you can't get your own air to breathe.

On the other hand, as I said, there are overreaches by the conservatives. And by the way, they include militarily. I think we have a wonderful military, full of able young people, very well equipped, and they can stop bad things from happening. But they're not really good at making good things happen in foreign societies. And it's on the whole my conservative friends who want us to be rebuilding other societies where we're not very good at it. So the answer is yes, we should have more government where we need in an interactive way to protect ourselves against abuses, but there should be more personal choice. And so that's the -- that's the current situation.

And so my answer is yes, I want more government involved in economic regulation and environmental cleanup and for reasons of public safety. I want less government telling me what personal choices to make as an individual.

AMANPOUR: Congressman, thank you very much. So you have heard both sides open up with their premise.

And let me ask you, Robert Reich, about the distrust and the fear of government, it's at record highs right now. And a recent Gallup poll shows that about 64 percent of Americans, including 48 percent Democrats, feel that a big government is the biggest threat to the future of this country as compared with only 26 percent thinking that big business is the biggest threat to the future of this country. Isn't that your problem?

REICH: Well, it's not my problem, personally. And Christiane, I think that this country has never, in our history, embraced the idea of big government. We don't like to think that we want big government. The idea of big government as a framing device in terms of a debate such as this inevitably sets it up kind of in favor of the side that doesn't want big government. As my debating partner just said the issue is really not so much how big the government is, it's what government does, it's who is government -- who government is for.

And I think lot of us are worried that government is doing the wrong things. It's not only invading personal space -- I mean, look at what Alabama and also Arizona have done with regard to allowing police to stop almost anybody who looks Latino on the suspicion that may not be here legally. We want a government that actually does protect the right things.

You mentioned distrust. Well, people distrust government? But how many people trust Wall Street these days? How many trust big corporations? How many trust the economic system? An Pew Foundation poll just done -- the results were just indicated Friday said that 77 percent of Americans think that the economy is unfair, the dice are loaded, essentially the game is rigged in favor of the rich.

AMANPOUR: You talked about what the government should be doing. So let me ask you, one of the big issues obviously that we have been debating all year is election. This election is jobs, the jobs crisis. There are something like nearly 23 million people who are either unemployed, underemployed or out of the work force. And of course during the Great Depression the government created big programs to get people back to work. Why shouldn't they do right now? Why shouldn't they be that kind of... WILL: First of all, because it didn't work during the depression. The cardinal aim of the New Deal was to put the country back to work. Unemployment never came below 14 percent until we geared up to be the arsenal of democracy in the Second World War. We have had a remarkably clear test under the Obama administration. They said, pass the stimulus and by 2011, the economy would be growing at 4% and unemployment would be 7.1 percent and falling.

I don't fault the president for having his economic projections wrong. This is a complicated society. John Kenneth Galbraith, one of your liberal friends was once said, that the purpose of economic projections is to make astrology to look respectable.

I don't fault the president for this. I fault the president for thinking that society is transparent and easy to regulate. Just as I don't fault the president for making a slew of horrible investments in green energy and all the rest -- Solyndra and other companies. I don't fault him for that, because no one expects the political class to be good at disposing money in the most productive ways.

FRANK: Well, can I respond to that. Because in fact one of the most successful things we have done recently is to keep the American automobile industry alive. Yes, Solyndra was a mistake, but there was a major liberal/conservative fight about whether or not we should inject funding into the American automobile industry. And as a result of that injection of funding, we have a thriving American automobile industry today that would have been in collapse.

And it's interesting that Ford Motor Company that was not looking for any of that money, because they had prudently put aside some money ardently argued for money to go to Chrysler and General Motors which are now alive and thriving. And there was significant appointment -- the American automobile industry is stronger than it has been in a long time because of a judicious intervention of federal funding.

As to the stimulus, yes, they overargued. But the fact is, quite clear, things are better than they would have been.

Now, I understand, it is not a good political slogan to say things would have been worse without me. You don't win on that. But it is clear, and I say that less politely in other forums, it is clear that the economic intervention that we did earlier in 2009, reduced the damage.

The president underestimated the difficulty we had in the economy. But when you talk about interventions, the intervention into the American automobile industry has been very successful and has promoted employment, it has promoted and kept alive an American automobile industry that would have been badly crippled if we hadn't done that.

AMANPOUR: Congress Ryan, you actually voted for the Wall Street bailout, and indeed the auto bailout as well.

RYAN: Right. The auto bailout in order to prevent TARP from going to the auto companies, because we already put $25 billion aside in an energy bill, which I disapproved of, to go to auto companies.

The point I would say with the auto bailout is we created a moral hazard now. Now we said if you're really big and you drive your company into a ditch, don't worry about, because the federal government might just bail you out the next time.

The other point I would simply say is, counterfactual is impossible to disprove, which is it would have been much better if we didn't do all of these things. It's not possible to disprove these things, but I would simply say, when we had deep recessions in these country, usually we come out of it really growing very quickly like we did in the 70s and the 80s. This recession, we are not recovering very well.

Look at how high our unemployment is. Look at how few jobs have been created.

FRANK: Do you think the automobile intervention was successful or not?

RYAN: I think we should have done a bankruptcy, because what we're doing now by saying the bond holders look out if you're not on the right side of the politicians in Washington you might lose your money. And so we're violating the rule of law.

FRANK: I don't see any company today that feels that they can be reckless and be bailed out. As a matter of fact -- we're letting companies fail all the time. There's no such moral hazard.

REICH: Can I break out of form and agree with Paul Ryan on one very important issue. And I think the Wall Street bailout, if we had to do it again, certainly, that bailout would have had strings attached. Those Wall Street banks would have been required to help homeowners, would have been required to put caps on executive salaries, would have been limited in terms of lobbying they could do from prevent Wall Street regulation.

Now would you have voted for that, Paul Ryan?

RYAN: With those strings? No, I would have put different strings on it. I would have said stick to the financial services sector, don't go into these other areas that you just mentioned. That was the whole part of TARP. And it was all taking toxic assets, not to buy stock in companies.

FRANK: We did vote for the bill. The bill you described is the one we voted for. The Bush administration decided it was so important to get the buy-in from the financial industry, that they ignored significant pieces.

AMANPOUR: And we have a question from our audience. We're going to go to you on financial services.

LARRY PARNELL, GEORGE WASHINGTON UNIVERSITY: Good morning. Larry Parnell, professor at GW's graduate school of political management. My question really has to do with what has been put in place since those days to prevent this happening again for consumers and investors to take some comfort from what we have learned in the past few years?

FRANK: I will be glad to respond, because we have in fact gone from being accused of not dealing with too big to fail to now overdoing it. And we are now being accused of too stingy to bail. The economists -- the economists did a simulation, it said if there's another crisis, we won't be able to bail people out.

The Federal Reserve gave money to AIG, the section 13-3. We abolished that in the bill. That no longer exists. We also said that if a company fails -- in the first place, it is, if you can't pay its debts, it is abolished.

Sarah Palin was half-right, which for her was a good average. We had death panels in the legislation that we passed, but they were for large financial companies. If a financial company cannot pay its debt, it is abolished. The federal government can then step in and pay some of the debts, but it is mandated to recover any of those debts that are paid and they can pick and choose and pay only as little as they need to keep them from contagious. And that is all recovered not from the taxpayer, but from other financial institutions.

WILL: Surely, it should be axiomatic that if you're too big to fail, you're too big to exist, because then the country is held hostage to you.

FRANK: George, how small would you make every bank? Should, no bank should be so big that if it fails it would be a problem? How small would you get the banks?

WILL: Below whatever threshold we determine...

FRANK: Well, what is that threshold, George? Would break up every bank in America?

WILL: No, I would break up the big ones.

FRANK: And to what size? Because here's the problem, people say that, because Canada has five banks. And if they're well regulated that doesn't cause a problem. But no one told me to what size.

The answer is not that if you're too big -- what we have said is this, if you fail that's okay, because that's your money as long as it's not the taxpayers' money. That's what we have done is to say that if you fail, you're out of business. We may pay some of the debts, but it comes from other financial institutions.

REICH: This is a terrific example of where so-called liberals and conservatives actually are not on polarized opposites. I mean, I happen to think we should cap the size of big banks. Big banks are bigger today than they were before the Wall Street bailout. I think that we ought to use the antitrust laws to make sure that banks don't get too big. RYAN: And bankruptcy laws.

REICH: And bankruptcy laws as well.

So where is the liberal? Where is the conservative position? We are in the habit, all of us, on being exactly opposite sides. But when you actually look underneath the surface, there is much more in common.

AMANPOUR: Congressman Ryan.

RYAN: That's altogether partly right. But here's our problem with this approach. We are amplifying too big to fail. We are saying that if the government deems you systemically risky, you're the one that's going to get bailed out. And so what's going to happen as a result --

FRANK: No, that's not true.

(CROSSTALK)

RYAN: So what are we saying? We are saying to the big banks, you're going to get the capital that's cheaper. We're going to have seven Fannie Maes and Freddie Macs instead of two. And the small banks are going to be left on the outside looking in. We're stacking the deck in favor of the big banks instead of the smaller banks.

FRANK: That's entirely inaccurate.

RYAN: I totally disagree with that, Barney.

FRANK: Let me make a point--

RYAN: Because you just said a couple of things. Government gets to pick and choose. We are putting more power in the hands of discretionary bureaucrats so that they can decide how to run these big companies. And the markets know that if things go down, we'll bail them out.

FRANK: That is simply -- you haven't read the bill.

RYAN: No, I read the bill three times.

FRANK: Here's what the bill says. Here is what -- in the first place, you say break them up. No one has told me to what size. And you do have an international competitive aspect. I don't want there to be no American financial institution that's capable of competing with all the international ones.

Secondly, what we have said is this, we'll be regulating them. The regulators are empowered to make them divest if they think in a particular case they're too big. There are caps on the amount of deposits they can take. But finally, if all that fails and they have to have more capital, more capital for the big banks and the small ones. But if that fails, they are put out of business. They are not too big to fail. We then will pick and choose to see what debts we may pay, but the bank is done. The shareholders are wiped out. Everybody is fired. There's no moral hazard. There is no more institution.

RYAN: You just made our case.

(CROSSTALK)

AMANPOUR: All right. On that note, then, in the next segment --

FRANK: Well, what then, if there's no institution, who's too big to fail?

RYAN: And the only people who can hire the legion of lawyers and compliance officers to deal with all of this are the big businesses, not the small businesses.

FRANK: Nonsense. They're put out of business.

AMANPOUR: Congressman, we're going to leave banks for the moment and go to people in our next segment. The rich and the poor and the government's freedom and fairness, when "The Great American Debates" continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ELIZABETH WARREN, CANDIDATE FOR U.S. SENATE: There's nobody in this country who got rich on his own. Nobody. You built a factory out there, good for you. But I want to be clear, you moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate.

Now, look, you built a factory and it turned into something terrific, or a great idea. God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

(END VIDEO CLIP)

AMANPOUR: Welcome back. That is the essence of what we're going to debate in this segment as our special edition continues here at the night studio at the Newseum.

That of course was Massachusetts Senate candidate Elizabeth Warren, defending the role of government. The resolution on the table today, there's too much government in my life. The hot topic on the campaign trail and on Capitol Hill.

Let me ask you, in 2007, the nation's top 1 percent took home more after-tax pay than the total bottom 40 percent. And now new reports show that at least one in 15 Americans are living in extreme poverty. So the gap between rich and poor is widening. Shouldn't the government do something to address that?

RYAN: Yes, and the poverty rates are as high as they have ever been. That's a good argument for the fact that current economic policies aren't working. Rather than trying to bring the people at the top down to the bottom, we should be focusing on bringing the people from the bottom up toward the top. Income mobility, economic growth.

And so we have to keep an eye on what is necessary to grow the economy so we can have more broadly shared prosperity by giving people income mobility, let people rise up. And that means, take the barriers away from allowing people to rise in society, don't have a society where we say this is enough, we're going to cap it, and we're going to try and equalize the differences.

Because what ends up happening, if you look at that new CBO study that's about income inequality, the best thing you can have to reduce income inequality is to have more recessions. I mean, that's basically what their conclusion is. And so you're going to have different outcomes of different people's lives.

The focus on our government ought to be to respect people's rights so that they can make the most of their lives. And the difference in our philosophies is not equalizing the outcome of people's lives, but giving equal opportunities so people can make the most of their lives.

AMANPOUR: But how does one do that, George Will? If as decades now of evidence shows, at least in the last decade, that this upward mobility in this country has stalled. Mitch Daniels is one who said upward mobility from the bottom is the crux of the American promise. Can government, should government do what the congressman is doing and allow upward mobility, which stalled?

WILL: Big government inevitably exacerbates the problem of inequality. Big government inevitably is a servant of the strong. I'll give you two examples. The tax code has been changed 4,500 times in the last decade. Every one of those times at the service of a group strong enough and attentive enough and wealthy enough to hire a Washington lawyer to represent them to game the tax code.

The welfare state exists to transfer wealth basically from the working young and retired elderly -- working young and middle aged to the retired elderly. The elderly are, according to the CBO study, the net worth of a family of a household on average, household headed by someone 65 years old or older is 47 times larger than that of the net worth of a household of someone 35 or younger. That's a record, and has doubled in the last five years. Big government is responsive to big, muscular interest groups.

(CROSSTALK)

REICH: Well, I -- let's just be clear about the facts. I mean, right now, the top 1 percent is claiming in terms of their pay, a larger share of total income than has been at any time since before the Great Depression. And their tax rates -- and their tax rates are lower than they have been in 30 years.

You look at that period. I mean, George, you say that, you know, big -- rich people and big corporations have undue influence. Yes, I agree with you. But the answer is not to shrink government and not even to have government attempt to invest in education, in job training and all of the ways in which we traditionally have generated upward mobility. The answer is to get money out of politics, to make sure that those who are at the top reaches, that is both individuals and corporations, don't have the untoward influence they now have.

One final point. In the first three decades after the second world war, we had in this country much more of an equal distribution of the fruits of economic growth. And yet what happened? It turned out that in those days, the economy grew faster than it has grown since. There was, under President Dwight D. Eisenhower, whom nobody accused of being a socialist, a marginal tax rate on the top of 91 percent. I'm not advocating we go back to 91 percent. I'm just saying that for conservatives to say that we cannot tax the wealthy, when all of the nation's wealth and income, virtually speaking, is at the top, to invest in people and education and training and everything else we need to invest, it's absurd on its face.

WILL: You are a pyromaniac in a field of strawmen. No one is arguing against government investing in education. That's not --

FRANK: Wrong. You guys are.

RYAN: No, we're not.

WILL: No, we're not.

FRANK: I'll make the point.

WILL: Look, I'm not attacking the elderly. I am elderly.

(LAUGHTER)

WILL: I have -- five years ago when I turned 65, I got my Medicare card. I showed it to my doctor, he said, that's wonderful, George, now we'll send your bills to your children. I find that a regressive transfer of wealth, and the welfare state is full of them.

FRANK: Let me talk about education. In the first place, George, you were simply wrong when you say all of the tax -- I thought you said all of the tax increases help the wealthy. I voted, Paul voted against, a tax increase under Bill Clinton which raised the rate on the top people -- at that point it was above 150,000, I would go higher than that.

It created great increase in revenue. It helped us balance the budget, along with military cuts. And, you know, I do want to go back to the fact that it is the right wing that wants to expand the government in form of the military enormously and also claims it's job-creating.

Interestingly, the only way we create jobs, according to my conservative friends, in government spending, is not with highways and not with environmental cleanup, but overseas military bases.

But the point is that the Clinton tax increase was not for the wealthy. It helped, it raised taxes on the wealthy. It actually moved more in the direction of equality in the tax code.

Secondly, as to education, it is this attack on public spending that we have had to defend Pell grants, college aid for low-income people, against right-wing efforts to cut them. And in particular, and when I talk about income inequality, both Ben Bernanke and Alan Greenspan correctly hailed community colleges as a major way -- as a transmission belt (ph).

But community colleges are largely public-funded. And community colleges are suffering from this right-wing attack on government revenues so that our ability to give community colleges the funds that give people the skills they need, is being eroded by this blindsided attack on government.

AMANPOUR: Congressman, when it comes to taxes, we've just said that the top 1 percent pay 38 percent of all federal taxes. But 49 percent American households don't pay any taxes at all -- any federal taxes at all, is that fair?

FRANK: It is if you don't think Social Security is a tax. In fact, the Social Security tax, which is a very significant tax, which goes to what George was just talking about, Medicare and Social Security, is not only a tax heavily paid by lower income people, but it's regressive.

Because if you make $100,000, then everything you earn is taxed, and if you make $1 million, 10 percent of what you earn is taxed. So, yes, if you exclude the Social Security payroll tax from the calculation, then the lower income people don't pay taxes. But if you look at the percentage of their income...

RYAN: Yes, but the EIC, you can't make your point.

FRANK: What? But the percentage of income that's taxed is taken into account and you take Social Security tax, then that figure isn't true.

AMANPOUR: I want to go to the audience, we have got a question there about lobbyists.

GERALD BALILES, DIRECTOR, MILLER CENTER AT THE UNIVERSITY OF VIRGINIA: I'm Jerry Baliles, director of the Miller Center at the University of Virginia. My question is this, many Americans believe that Washington is dominated by lobbying groups that represent both the left and the right.

And I'm curious whether in your judgment that's the case? And if the government is influenced by too much in the way lobbying, then how do you reform it without jeopardizing or threatening our valued traditions of the right to organize and to speak freely?

FRANK: Well, let's broaden that one, jeopardized by lobbyists and historians. Let's get the whole...

(LAUGHTER)

AMANPOUR: Let me ask you first, Congressman. And then I'll ask you, Secretary Reich.

RYAN: I was struck at something Bob said. How does having big government get money out of politics? It's the other way around. If the power and the money are going to be here in Washington, that's where the influence is going to go.

And so what we're doing by having big government concentrated in a few, in politicians and bureaucrats up here, that is where the powerful are going to go to influence it, by reducing the size and scope of government. By having government live within its limits, you're reducing that power center and decentralizing it and sending it back to the people where it belongs.

(CROSSTALK)

FRANK: Can I stress again, I am struck by -- can I just say one again? When people talk about limits, you guys just keep exempting the military. There was an enormous amount of military -- we spend more on the military than on Medicare.

We are building roads and we are building schools and we are building bridges in all kinds of countries in the rest of the world. And somehow it's money that's spent on the military disappears from your worldview.

(CROSSTALK)

AMANPOUR: Secretary Reich, since people really do, really do worry about this, and as the governor said, it's both parties, how does one get all of that money out of government, out of elections?

REICH: Well, first of all, we have much stricter campaign finance laws. I think we may need an amendment to reverse the Supreme Court's ridiculous rulings that say that money is speech and corporations are people. I mean, how absurd.

You know, the average First Amendment rights of most people are being trampled on these days because so much money is flooding Washington.

Paul Ryan, going back to your point, my concern is not so much with the size of government, it's what government is for. And if you and I can just simply agree to get money out of politics, and to reduce government to the size that it works for average working people, not for corporate welfare, not for defense contractors, not for Wall Street, not for agribusiness, not for all of the big industries that now claim so much of the public weal, then you and I, maybe we can make some progress.

RYAN: But, Bob, we passed McCain-Feingold, so everything should be all fine.

(CROSSTALK)

FRANK: The Supreme Court threw it out, Paul. You know that. That's disingenuous.

WILL: It is axiomatic that if you want to reduce the role of money in politics, reduce the role of politics in allocating money and opportunity in this society, leave it to the market, private voluntary transactions between individual.

REICH: George, you say leave it to the markets, well, we've tried leaving things to the market. Look what happened on Wall Street, we left that the market and Wall Street exploded. Look what happened with Massey Energy. We left that to the market and we had mine cave-ins.

What about the...

WILL: Some of us...

REICH: ... poor in this country? What about education? What about job training? What about roads and bridges and everything else we depend on? You're going to leave that to market?

WILL: Some of us think that the big problem began in this country in the financial crisis because a lot of wizards in Washington decided they knew -- they just knew how many Americans ought to own houses. And they were going to do whatever they needed to do to support banks, to subsidize banks, and to set interest rates that would encourage this.

AMANPOUR: All right. We've got to go to a break. We'll continue this.

And up next, when does Uncle Sam become Big Brother? When political decisions challenge individual liberties as "The Great American Debate" continues.

(COMMERCIAL BREAK)

AMANPOUR: Welcome back to "The Great American Debates." The resolution on the table, there is too much government in my life. And right now, we're going to talk about where government should be in terms of individual liberties and privacy. We have a question to my right.

UNIDENTIFIED FEMALE: I'm a preschool teacher in a university town, where dangerous driving is an issue. I read the headlines when I was leaving town that the camera, red light camera surveillance issue was not approved. And my question is, when does safety trump personal -- people feel that's an invasion of privacy, to be videotaped. We use it in convenience stores, many places, we use it to catch criminals. Thank you.

AMANPOUR: Eminently sensible. George?

WILL: Well, I'm worried, actually, by the mad proliferation of cameras following us through our lives. It does seem to me that when you say when does X trump personal liberty? Almost never.

AMANPOUR: When it's a matter of saving lives?

WILL: I don't want to make safety parallel with, equal to, let alone trump personal liberty.

FRANK: I would welcome -- I do -- there's a complication when you're driving a car, because it implicates others. But I would assume, George, you're going to sign on with me and Ron Paul in removing the criminal penalties on the use of marijuana and on stopping this terrible regulation of the Internet in which we tell adults that they can't gamble.

And frankly, here is where the right wing is very much for big government. They are the ones who want to regulate personal choices. Birth control, whether or not -- we'll leave aside abortion, which is more controversial -- they want to regulate the use of birth control. As I said, gambling. Private sexual practices. Who can get married. I have never understood why heterosexuals who want to get married, believe that if I were to marry a man, they would somehow lose interest in their wives. I am not -- I am not aware of what my attractive role would be there.

So, in fact, it is the case -- there's also the case of course with the military, and again, we didn't get any take-up of that, but a major reason for the expansion in American government, taxation, et cetera, is an overly extended American military, which is committed all over the world to accomplish all kinds of social and economic purposes far beyond defense.

But, let's talk about individual liberty. Gambling, marijuana, personal sexual practices, what people can read -- here is the case where, frankly, it is the right wing, particularly the social issues component of the right wing, that has been the ones fostering big government.

REICH: But this is another issue, area, where so-called liberals and conservatives actually don't feel all that much differently. I mean, for example, when we talk about surveillance, most people don't want cameras everywhere. Most people want to be able to count on their individual freedom. Most people don't like the idea that is contained in the new defense act, the authorization act, that any American could be deemed an enemy combatant and lose all of his or her rights with regards to indefinite suspension, habeas corpus. That's not the America we know.

AMANPOUR: What about what some people see as a paradox, that the right--?

RYAN: Big Brother-ism.

AMANPOUR: Big Brother-ism, that the right wants to keep the government out of the boardroom but in the bedroom, so to speak.

RYAN: So, look, Big Brother-ism. I find it interesting that my friends on the left say that they are the ones who are the opponents of Big Brotherism, when they're passing all of these laws to take power from individuals (inaudible) to Washington. When we get into social issues, that's a different debate about what we believe are the origins of life and things like that.

I noticed, Barney, you have a big thing with the national defense, with the Defense Department. That's the primary function of the federal government. You may not like what they do.

FRANK: But to build bridges in Afghanistan -- where in the Constitution is that?

RYAN: This time last week, this time last week I was in Helmand Province with our Marines in Afghanistan. They're out there fighting for our liberties and our security, depriving safe havens for terrorists who can come and attack again. You might not like that. You might have a problem with that.

FRANK: They go far beyond it. The point is--

RYAN: It is a primary function of the government. FRANK: You're talking about the construction of society -- I'm in favor of the military stopping bad things from happening and shooting bad guys, (inaudible). But they are far beyond that, into construction of societies and in trying to build. Look, we're still in Iraq--

RYAN: Look, we can debate the --

(CROSSTALK)

FRANK: Let's do that.

(CROSSTALK)

AMANPOUR: We're out of Iraq. And Afghanistan is going to be winding down.

FRANK: No, we're in Iraq, building Iraq.

RYAN: The problem is, this is something that only government can do. National defense is a primary function of the federal government.

FRANK: Just because only government can do it, doesn't mean we have to do it if no one should do it.

(CROSSTALK)

AMANPOUR: Let's go to the audience quickly. Let's go to the audience quickly.

UNIDENTIFIED MALE: Good morning. This is a great debate. I'm an evangelical Christian minister from Fredricksburg, Virginia. I'm president of an organization called the New Evangelical Partnership for the Common Good. And so I'm interested in finding common ground and I'm not finding a whole lot here. But I think it's great discussion.

My question is this. There's a great paradox, I think Congressman Ryan mentioned that paradox. One is this, two pieces of economic information came out this week, one that we're a nation of haves and have-nots. 48 percent are now poverty or working poor. That's the first point. The second point is that we don't believe that as Americans. The percentage according to Gallup that actually know that this paradox exists, this great income inequality, has fallen. And so my question is, isn't this a great American delusion? And an inconvenient truth that we deny at our peril?

RYAN: Inequality falls when we have less economic growth. That's the paradox. The point we're trying to say as conservatives, is what do we do to set the conditions for economic growth so that we have upward mobility, so that people can rise through society?

We have a dynamic society and the American economy where people move all around in income groups. People who are at the top don't always stay there, and people at the bottom don't stay there. The question is, what are we doing to make it as easy as possible for people to rise through the ranks and make the most of their lives and remove those barriers in front of them?

FRANK: And the answer is not nearly enough. Yes, economic growth is a necessary but not a sufficient condition. We now read daycare for working mothers is being cut by this assault on taxation. Community colleges are being cut. Pell grants are being cut. I'm talking about those measures which will allow people who are not in great circumstances to move forward. And only the government will do that. There needs to be sufficient public spending for community colleges, which are generally overwhelmingly public entities, and are being cut back now. On Pell grants for lower-income people. For working mothers to have daycare. It's precisely those things that enable some people who are not now fully participating in this growth to participate, that are the victims of some of this mindless budget cutting.

REICH: Also, beyond this, Christiane, you started to ask about civil liberties and civil rights. One of the great -- one of the great and proudest things this federal government has ever done, has to do with the Voting Rights Act and the Civil Rights Act, making sure that there's upward mobility and equal opportunity for people with -- not only based on race and religion, based upon disabilities, based upon sexual preferences. I mean, if we did not have those laws, this country would not be as strong as it is now and we wouldn't have the upward mobility that we now have.

RYAN: No argument there.

FRANK: Can I get an answer on marijuana, George? Are you with me on it? I mea, personal liberty, if someone wants to smoke marijuana who's an adult, why do you want to make them go to jail?

WILL: As you know, first of all, on the Internet gambling, as you know, I'm on the -- a supporter of the Barney Frank bill.

FRANK: Yes.

WILL: With regard to marijuana, I need to know more about -- whether it's a gateway to other drugs. I need to know how you're going to regulate it, whether you're going to advertise it. I am open to the--

FRANK: Oh, you're just a copout.

WILL: We're not--

FRANK: It's been around for a long time. The gateway -- anything is a gateway to anything. That's -- and let's put it this way, that's the slippery slope argument, which is a very anti- libertarian argument. The fact is that if someone is doing something that's not in itself wrong, that it might lead later on to something else, then stop the something else. Don't lock them up for smoking marijuana.

WILL: What you're calling a copout is I'm calling a quest for information.

FRANK: How long is it going to last, George? We've been doing it for decades.

WILL: I understand liberalism's aversion to information because it often does not go in their direction.

FRANK: No, I'm averse -- I've been studying this for a long time. You know, you're on Medicare, and how much longer are we going to have to wait for you to make up your mind?

AMANPOUR: I want to get back to the issue of social mobility, because I think it is the --

RYAN: Good. Let's get off marijuana and onto business.

FRANK: It's a great embarrassment to the conservatives that they want to tell people--

(CROSSTALK)

FRANK: Come on. Paul, this is big government. Who can I have sex with? Who can I marry? What can I read? What can I smoke? You guys on the whole -- not all of you -- but it's the conservatives that want to intrude on personal liberties there.

RYAN: All right, Christiane.

(LAUGHTER)

AMANPOUR: Taking that into account, the basic function of the government -- this government has in the past enabled social upward mobility. This is something governments know what to do. Education, health care. To create a healthy society.

RYAN: The basis.

AMANPOUR: Don't you think that's where it should be involved?

RYAN: There are three points I would make here, very quickly. Number one, the math just doesn't add up. All these tax increases they're talking about, letting the Bush tax cuts expire on the top, it will pay for 8 percent of the president's planned deficit spending. So they are raising these taxes to pay for spending that never catches up. We're going to run about $9.5 trillion of deficits over the next 10 years if the president has his way.

The second point is, let's stop subsidizing the wealthy. Stop crony capitalism. Stop corporate welfare. Means-test our entitlement programs. And the third point is, let's get out of this class division rhetoric. It's dangerous. We should not be speaking to people as if they're stuck in some class and that the government is here to help them cope with their lives. We should appealing to people's sense of upward mobility.

FRANK: I never heard a poor person complain that it was dangerous to talk about --

(CROSSTALK) AMANPOUR: You will be able to sum up in your closing arguments, both of you, as we take a break.

Coming up -- the teams get, as I said, one last shot to make the sale. So, stay with us.

(COMMERCIAL BREAK)

AMANPOUR: It's been a spirited and civil debate. And now the teams get one last chance to make their case. We have time for brief closing statements. Starting with George Will.

WILL: I want to thank Bob and Barney for shouldering the Herculean task of arguing that government today is too small, too frugal and too modest. I think big government harms prosperity. It harms prosperity by allocating resources not in terms of efficiency, but in terms of political power that directs the allocation. I think big government harms freedom, because it is an enormous tree in the shade of which the smaller institutions of civil society cannot prosper. And most of all, big government today harms equality. It harms equality because, by concentrating power in Washington, in big government, it makes itself susceptible to the rent-seeking by big, muscular interest groups. The only people who can come to Washington and bend the government to private purposes.

Get the government out of our lives more and more, and you'll find that freedom and the market allocations of wealth and opportunity prevails.

Jefferson understood -- Jefferson understood that you can have a government with minimal attention to the absolute essentials we have talked about. Of course, we want government to build roads, we want government to defend the shores, we want the government to deliver the mail. But after it does the essentials, understand what Ronald Reagan did. When Ronald Reagan said we're going to have less government -- under Reagan, respect for government, something we all want, respect for government rose as government's role declined.

AMANPOUR: Thank you, George Will. Robert Reich?

REICH: Well, first of all, let me thank both of you for trying to defend the indefensible, which is that the market is working beautifully and you don't need much with regard to government.

I think if I can summarize what my debating partner and I have been saying, it's that the issue is not so much how large government should be, but who government should be for. And these days, so many Americans are worried that the game is rigged, that the dice are loaded in favor of big corporations and Wall Street and the rich.

And indeed, what George, you have said over and over again, and Paul Ryan, you have said, is that yes, there is too much crony capitalism, there is too much of big corporation and the rich and Wall Street. But you seem to believe that if you got rid of government, then somehow individuals would not be imperiled by those same forces. They would be. Big government is a canard. Look, I spent half of my life in government. Do I look like big government to you? Let's get serious about what we're talking about. And let's make sure that we understand we're living in a society where people care about jobs, they care about wages. They can't get ahead because so much wealth and income are at the top and taxes are not being paid at the top to finance education and health care and infrastructure that everybody depends on to get ahead.

Upward mobility is being slowed because of that inequality, and that inability of us to actually have the effect we the people, not we the corporations, not we Wall Street, not we the rich want to have.

AMANPOUR: Robert Reich, thank you very much. And we will be right back.

(COMMERCIAL BREAK)

AMANPOUR: And that's our program this week. Our thanks to the Miller Center at the University of Virginia for partnering with us on "The Great American Debates." And thanks of course to the Museum for hosting us. Send your comments on Twitter, Facebook, Yahoo! and at abcnews.com/thisweek and thank you also to our distinguished panelists. Congressman Paul Ryan, Congressman Barney Frank, Robert Reich and George Will.

You can also find more information about this debate on our website as well. Be sure to watch "World News" with David Muir tonight for all of the latest headlines. For all of us here, thank you for watching and we'll see you next week.

END

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