KRUGMAN: ... to print -- to mint a $2 trillion platinum coin, which is ridiculous, but the whole debate is ridiculous, right? If you've got somebody who's holding the American economy hostage and trying to extort policy concessions that they could never actually pass through Congress and that they could never get past the voters, you go for whatever you can do to stop it. But he won't do that.
STEPHANOPOULOS: ... I think the only time the president could have done something is go back in December when Republicans were calling for an extension of the Bush tax cuts. He could have called for an extension of the debt limit then. It might not have worked, but it's when he had the most leverage.
AMANPOUR: I mean, that is an important question. There's nothing legally, constitutionally any way that binds the debt ceiling to the -- to the debt or the budget. Why didn't he take a stronger stance in saying, these are two separate issues?
KRUGMAN: It's what we asked on everything, right? Why -- why -- why is the president unwilling -- you know, he's...
AMANPOUR: George, he could have done it, right?
WILL: Done what?
AMANPOUR: Done that.
KRUGMAN: He always signals -- he begins every negotiation by signaling, "I'm willing to move halfway." So the other side moves further, and he moves halfway. He's never been willing to...
NORQUIST: He paid attention to the 2010 election. He noticed what happened. I don't think the president -- well, we know the president wasn't willing to stand up and say, "I don't care about overspending. I just want you to let me borrow more money. I don't care about overspending." He can't say that three times out loud and have a prayer in 2012.
The Republicans, they're going to take the Senate in 2012. If you look at the 23 Democrat seats up, half of them in reddish states, and 10 Republican Senate seats up all in reasonably Republican states, with the possible exception of Massachusetts, and he's got $10 million in the bank and looks great in a bathing suit. I mean, you're looking at a Republican Senate in two years. How is he going to hold on to the White House if he says he doesn't care about spending?
KRUGMAN: The 2010 elections were a run on two main themes: Where are the jobs? And Democrats are going to cut Medicare. And so Obama's response to that is, let's do stuff that's going to further reduce employment and let's -- let's give the Republicans cover on Medicare.
STEPHANOPOULOS: But look at reality. If there are 50 House Republicans that are saying we're willing to send the country into default, he just doesn't have the leverage.
KRUGMAN: ... if he just says no.
AMANPOUR: We're going to talk about jobs and further leverage right after a break, when we'll have more with our roundtable. But first, how will tomorrow's markets respond to today's news? We get an expert reality check. Stay with us.
AMANPOUR: This week, Wall Street started to waver. With the debt deadline looming ever closer, the Dow plunged, its biggest drop in a year. The ripple effect stretched to overseas. The international markets also shaken by the climate of deep uncertainty and confusion. So what will tomorrow bring?
Mohamed El-Erian joins me from California. He's the CEO of PIMCO, the world's largest bond fund.