'This Week' Transcript: Sen. Jim DeMint

AMANPOUR: No, it doesn't shock me. But is there a certain amount of responsibility also to be taken for not focusing on jobs and just on cutting?

HOLTZ-EAKIN: They're not mutually exclusive. We are headed straight toward a Greek-style fiscal crisis. We are in the -- in the range of the kinds of measures that show countries have that. So that's not a pro-jobs agenda, to have a fiscal crisis. So if you steer away from it, that's a good idea.

And the cutting gets greatly exaggerated. There's all this huffing and puffing about the so-called $100 billion cuts the Republicans proposed at the beginning of the year. That would have cut actual spending by $7 billion in 2011. It's a $15 trillion economy. So at some point, economic rationality has to enter and all this demagoguing of cutting back spending...


BERNSTEIN: The problem is it goes the wrong way.

KRUGMAN: But, yeah, and it's more than that. I mean, it's relative...


KRUGMAN: ... what has been happening on trend and what should have been happening. It's all wrong. Look, we've laid off -- in effect, America has laid off several hundred thousand schoolteachers in the last couple of years. That's crazy, right? First of all, education is a priority. Second, we're cutting jobs that we need at a time when -- when we need to be creating more jobs, when we need to be -- you know, this is -- so these are real things.

If you look at -- I actually just did these numbers. If you look at actual government buying things, as opposed to things like food stamps, but actual government purchases of goods and services, in a normal year, that rises by around $50 billion a year. Over the past year, it's fallen by $60 billion. That, again, is crazy. That's a major drag on the economy.

And I can't believe -- you know, Doug is saying, you know, we need to stop talking about short-term stimulus. Nine percent unemployment and two percent interest rates is the...

HOLTZ-EAKIN: Well, here's the problem.

KRUGMAN: Why should you not be talking about...

HOLTZ-EAKIN: I want to address that, because you take something like what Jared proposed on the schools, which is the place where there's great overlap both politically and on conservative and liberal economics. Productive infrastructure is very important. Having prettier schools at the end of a big spending program makes no American worker more productive. So if you want to do infrastructure, do it on productive infrastructure. That would get support.


AMANPOUR: Apparently it does. You say -- you say...

BERNSTEIN: Absolutely. No...


AMANPOUR: ... invest in people rather than just machinery?


BERNSTEIN: The schools have buildings.

AMANPOUR: Right, but people do it.

BERNSTEIN: The schools have a backlog of maintenance and repair that has everything to do with energy efficiency, with safety, with the ability of kids to go to schools that we can drop our kids off in the morning and feel good about. And this is a program that is labor-intensive, as opposed to capital-intensive. Right now, we've got to put people to work insulating, repairing windows, boilers, roofs, floors.

But let me say one thing about another -- another number that's very important right here. It's not just that Paul is exactly right on what we need to do. And by the way, the president is, as well, and I think the ideas that we're talking about will move the needle.

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