'This Week' Roundtable: Economic Outlook

Paul Krugman, Doug Holtz-Eakin, Sheila Bair and Roger Altman speak on national debt. (ABC News)

(BEGIN VIDEO CLIP)

BOEHNER: We're not talking about billions here, we should be

talking about cuts in trillions, if we're serious about addressing

America's fiscal problems. With the exception of tax hikes, which in my

opinion will destroy American jobs, everything is on the table.

(END VIDEO CLIP)

AMANPOUR: House Speaker John Boehner throwing down the gauntlet in

negotiations over raising the federal debt ceiling. Here's that debt

clock again. We have got a live picture there in New York and it waits

for no one. Soon, the numbers will crash through the debt ceiling,

exceeding the amount the U.S. is legally allowed to borrow. The stakes

couldn't be higher, so what is the solution?

Joining me now, Doug Holtz-Eakin, who ran the Congressional Budget

Office and served as John McCain's chief economic adviser in 2008.

Nobel prize winning economist Paul Krugman of the New York Times.

Sheila Bair, who is wrapping up her term as chairman of the Federal

Deposit Insurance Corporation. And Roger Altman, a former deputy

treasury secretary in the Clinton administration. Thank you all for

being here.

This seems to be a never-ending conversation, but the limit we're

now hitting up against. How is President Obama to respond to the call

for trillions, not billions of dollars in cuts?

KRUGMAN: I think he cannot -- if he gives in on this, he's setting

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Paul Krugman, Doug Holtz-Eakin, Sheila Bair and Roger Altman speak on national debt.

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himself up for repeated blackmail. He's basically saying that I care

about the economy more than the Republicans do, and therefore, every

time they threaten to blow it up -- even though it will hurt all of us

-- I am going to give in.

So I think Obama has got very, very little wiggle room, even though

it's a terrible thing.

AMANPOUR: Lots of economists are saying the Republicans are playing

with fire, that hitting the debt limit, exceeding it is not like

shutting down the government. It could cause a real cascading economic

crisis.

HOLTZ-EAKIN: I don't think there is any great desire to hit the

debt limit. The key is to recognize the limit is a symptom and that the

fundamental problem is the underlying condition of the U.S. budget.

What you're seeing now are calls for, both from Speaker Boehner and from

the Senate minority leader, Mitch McConnell, for real solutions to the

real problems. It's not about the debt limit. It's making sure that in

the short term you get cuts, in medium term you have an enforceable

path, and that you take care of something in the long term. The

entitlements have to be on the table.

AMANPOUR: So, we do keep hearing this now. There obviously seems

to be the momentum for dealing with entitlements. But how? How does

one deal with Medicare, Medicaid? We already saw Paul Ryan and his plan

for Medicare. They seem to be running away from it now. So how does

one deal with this in a way that's real, rather than just ideological,

if that's possible?

BAIR: Right. Well, I'm a bank regulator, I'm not a budget expert,

as some of these other gentlemen are, but we have been following this

very closely because we are very concerned about the outcome and how it

could impact the financial sector. But I've also worked in Washington a

long time, and it seems to me that if the pain is evenly distributed and

the general population feels that there's fairness in whatever ultimate

outcome is agreed to, I hope, by the administration and the Congress,

then I think it can politically, it can sell.

I do think that both sides have a point. Last November, I published