KRUGMAN: In some ways -- and some of my -- you know some of my liberal friends are also in a way welcoming the sequester because they think as the effects kick in, it will remind people why actually we need a government that does its job.
STEPHANOPOULOS: It will put more pressure on defense, which could cause some trouble.
JOHNSON: And of course, that's the problem. 65 percent of the budget is off the budget. It's not -- it's on automatic pilot. If you ran a business that way and basically said, health care? Don't worry about, you know what we're spending on that, spend whatever. Same with -- with retirement. You'd be bankrupt in no time. The fact of the matter is the federal government is bankrupt. The only reason -- reason it's not functionally bankrupt is because we can print money. And that's what we're doing...
KRUGMAN: There's a remarkable document that almost nobody noticed came out yesterday from the Congressional Budget Office about the -- about the budget. And what it said is, it's projecting a deficit of $845 billion this year, of which fully half is what they call automatic stabilizers. Low revenue because of depressed economy, unemployment benefits which are high because of the depressed economy. With a fully recovered economy, the budget deficit would be down to about $420 billion which is, in fact, a level that is consistent with a stable debt position.
KRUGMAN: The adjusted budget deficit now is back to what it was in 2006.
KRUGMAN: Back to what it was during the height of the housing bubble. So we are in fact -- we have already basically brought the budget under control, and nobody noticed.
STEPHANOPOULOS: For the next 10 years.
SCHULTZ: What CBO has also said is that if we don't replace -- if the sequester remains, we'll lose about 750,000 jobs. Evidence that a cuts only approach like the sequester, particularly one that is indiscriminate, takes a meat ax instead of a targeted responsible approach to spending cuts, with balance from closing tax loopholes that only benefit the wealthy, and using that to reduce the deficit. Make sure that we also talk about entitlement reform, which yes, I would be willing to support that if we have a balanced approach.
And the only ones who, unfortunately right now are on the side of cuts only is the Tea Party extremists and the Republican party in the House and the Senate.
GOLDMAN: Sequestration is a lose-lose, for both sides. For Republicans, to the extent that they're seen as uncompromising to a fault. This is just going to hurt the brand even more. For the president, we're seeing robust job growth, great trends in the economy right now. And the sequester issue has yet to drop. And to the extent that it starts shedding 750,000 jobs a year to push the economy back, that's bad for the president too.
STEPHANOPOULOS: Will -- will, this -- and that's one of the questions, we saw this robust jobs report this week. Is the sequester -- is this going to actually make the sequester less...
JOHNSON: George -- George...
KRUGMAN: I don't think the problem is going to be the fact that it hits the economy, though it will hit the economy. And it -- it's -- it's a real shame because it looks like finally the engine is really catching. And just at the moment the ending is catching, somebody is, you know pulling the plug.
JOHNSON: At what point do we restrain the growth in government? What point?
KRUGMAN: Spending growth has been exceptionally low under Obama. We just need to say that.
JOHNSON: We're up to 23 percent of our economy...
WILL: (Inaudible) your adjective about robust growth.
WILL: If the workforce participation rate were as high today as it was just 12 months ago, the unemployment rate would be 8.3 percent. If the workforce participation rate were as high today as it was when Mr. Obama was inaugurated, the unemployment rate would be over 10 percent.
STEPHANOPOULOS: If all of the government jobs weren't cut, then...
JOHNSON: We are still 3.1 million jobs behind the high point in November of 2007.
JOHNSON: 3.1 million jobs. And the -- the fact is, the average -- the average growth of -- after 13 quarters post World War II recession -- recovery is 18 percent. Under Ronald Reagan 19 percent. Under Obama it's about 7 percent because of all the regulations.
SCHULTZ: Our friends on the other side of the aisle unfortunately like the Senator, continue to root for our economy to not be doing well.
JOHNSON: Absolutely not. Absolutely not.
SCHULTZ: The fact is we've had...
SCHULTZ: ...excuse me. We've had 37 straight months of job growth in the private sector. Four of the last five months have been 200,000-plus jobs a month. As it -- look, I want to start where I began which is that there is a trust deficit between the two sides. I am someone...
WILL: The big difference is that...
SCHULTZ: ...there is a trust deficit, and the way in my experience in 20 years as a legislator that you close that trust gap, is to sit down and continue to talk. I'm a lot more likely to reach consensus and agree on the facts when I have spent some time getting to know, and working with the other side. And we've got to make sure that continues.
STEPHANOPOULOS: The gulf is still wide. We do have to take a quick break. Up next, Jeb Bush back in the national spotlight with a new book on immigration, and an open door to running in 2016, he joins us next. Plus Mr. Paul goes to Washington, setting Twitter on fire with his filibuster on drones, and Facebook's Sheryl Sandberg sparking a fierce debate on women and work, and she's going to weigh in on all that when we come back.
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[HANNITY 11/9/10] HANNITY: Do you think your brother Jeb will be President one day? G.W.BUSH: I wish he would be.// When the man says I'm not running, he means it. I wish he would run. // [LARRY KING LIVE 11/22/10] H.W.BUSH: Would he be a good President? Absolutely. Don't just take that from a father prejudice view. I mean he's a good man. He performed as governor. He's well spoken. He is not an extremist. He's not a wild guy that attributes bad motives to those that disagree with him and he's good. And people that know him and hear him say the same thing.
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STEPHANOPOULOS: It has always been no before, but Jeb Bush opened the door just a crack to following the footsteps of his father and brother this week when he made the rounds for his new book, Immigration Wars, co-authored with Clint Bolick, and we're glad to have the former governor joining us on This Week right now. Thanks for joining us, governor.
BUSH: Thanks, George.
STEPHANOPOULOS: I want to get to the book in just a second, but let's start out with that charm offensive this week from President Obama, having dinner with Senate Republicans, talking with Paul Ryan as well over lunch and it really seems like he's trying to resuscitate this grand bargain over the budget. What do you make of that?
BUSH: I don't -- I don't know what the-- what the intent is, but I do-- I'm very encouraged by the fact the president is trying to restore some personal connection with policymakers in Congress. I'm at the Reagan Library today and that's kind of what Ronald Reagan did. He didn't-- scorn his adversaries, he embraced them and got a lot done. And so when I saw that-- these meetings, the lunch with Paul Ryan and-- and other-- and the dinner of course, this is very positive in my mind. It makes it harder to-- to reach agreement when there's not trust. It's just human nature. And so this is maybe a good, positive first step.
STEPHANOPOULOS: Ronald Reagan was also willing to reach out for new revenues when he thought it was in the best interests-- of the country. I just want to get your position clear on this. You've talked about the challenge of reducing debts and deficits and said that you would be open to some new revenue, if you believe the president was serious about entitlement reform. Are you seeing those signs of seriousness and are you sticking by that position?
BUSH: I haven't seen the seriousness of the president's-- efforts. I'd love to see a specific plan that really did reform-- bend the cost curve for Medicare and the entitlement system. I haven't seen it, so-- if there is-- through these talks, some kind of consensus that emerged, I don't think you should say, "No, no, no--" about anything.
Frankly, there was already been one of the largest tax increases in American history a month ago. And frankly, we ought to be focused on sustained economic growth, which grows more revenue for people and for government than any tax increase-- that's been suggested, so there are a lot of things that could be done to create a real grand bargain. And-- let the process work. I'm hopeful that the president's sincere about this.