Transcript: David Axelrod and Sen. Charles Grassley


STEPHANOPOULOS: Good morning and welcome to "This Week."


OBAMA: We're going to get it done. I won't engage in hypotheticals in which we don't.


STEPHANOPOULOS: Obama sells his plans hard.


OBAMA: I'm pushing my idea.

I can't stress enough the importance of this vote.

We have not drawn lines in the sand.

That's up to the Senate to take the next step.


STEPHANOPOULOS: Republicans stand their ground.


REP. JOHN A. BOEHNER, R-OHIO: I've seen some pretty crazy things, but I have never seen anything this ridiculous.

SEN. MITCH MCCONNELL, R-KY.: This isn't the only Democrat claim about health care that's increasingly suspect.


STEPHANOPOULOS: Showdowns approach on energy and health care, but is bipartisan compromise still possible? We'll ask our headliners, the president's senior adviser, David Axelrod, and top Senate Republican, Chuck Grassley of Iowa.



GOV. MARK SANFORD, R-S.C.: I've been unfaithful to my wife.


STEPHANOPOULOS: A governor's strange confession. A superstar's sad end. That and all the week's politics on our roundtable, with Paul Krugman, Peggy Noonan, Kathleen Parker of the Washington Post and cultural historian Michael Eric Dyson.

And as always, the Sunday Funnies.


DAVID LETTERMAN, TALK SHOW HOST: This Ahmadinejad guy during all those protests keeping a very low profile in Iran. His staff said he was hiking.



Congress has gone home for their July 4th break and they had better rest up, it's shaping up to be the busiest summer in a generation: health care, energy, the Supreme Court, and the economy. And for the debate on where things stand right now, we're going to begin this morning with the president's senior adviser, David Axelrod.

Welcome back.

AXELROD: Thanks, George. Good to be here.

STEPHANOPOULOS: Let's begin with that vote Friday night in the House, this vote on climate change legislation, very close, 219 to 212. Democrats say it's a major step forward for energy independence, to create green jobs, to control global warming.

But you know the Republicans are saying it's going to cost Americans jobs, going to send jobs overseas. And most important, they say it is a huge tax. And on that they have some backup from one of the president's supporters, Warren Buffett.

Take a look.


WARREN BUFFETT, CEO, BERKSHIRE HATHAWAY: I think if you get into the way it was written, it's a huge tax and there's no sense calling it anything else. I mean, it is a tax. So it -- and it's a fairly regressive tax.


STEPHANOPOULOS: How do you answer that? Republicans say this is the defining vote of 2008. They're going to use that in the 2010 elections.

AXELROD: Well, you know, it's interesting. We're trying to solve a problem that has languished for a decade, the problem of energy that has bedeviled us for a long time. And they're talking about how they can use it as an issue inaction as somehow a strategy. And that's not a strategy.

As for the tax issue, you know, I have a high regard for Warren Buffett, and the president does as well. I think the Congressional Budget Office addressed this issue, and their conclusion was the way the bill was written, the impact on the average American will be negligible over time.

And I think it was written for...

STEPHANOPOULOS: About $150 a year.

AXELROD: ... that reason. In 2020, and for lower income people, it actually will be a net gain because they'll get some help with their energy bill. So I think this is a phony issue.

And the real issue is, what is the Republican strategy for creating jobs? This bill actually, they call it a job killer, it will create millions of green jobs, the jobs of the future. We've lost millions of jobs in the recession that began last year and continues.

What is their strategy for that? What is their strategy for reducing our dependence on foreign oil? And how are we going to deal with this issue of carbon pollution that threatens people's health and the planet?

STEPHANOPOULOS: As you know, you're also facing some resistance from Democrats though in the Senate on this bill as well, senators like Claire McCaskill saying they're going to need some major changes.

And I've been trying to get into the issue of legislative strategy a little bit. The president is also pushing very hard on health care reform. He said he wants the Senate to act on this energy bill as well.

Does he want them to take it up right away or wait until after they finish considering health care in the fall?

AXELROD: Well, I think this energy bill will probably be dealt with in the Senate in the fall.

STEPHANOPOULOS: So after health care.

AXELROD: Health care I think will be the first thing on the agenda. Both the Senate and the House are well down the road on that.

But, George, understand that both of these issues, energy and health care, have languished for a long time. And the president believes that we have to deal with these issues in order to build a stronger foundation for our economy in the future.

And so he is taking the long view about how we get our economy moving, not just in the short term, but the long term. And he is asking Congress to join with him in this effort.


STEPHANOPOULOS: ... with that, especially on health care, excuse me, is figuring out where the revenues are going to come from. And, you know, a lot of talk about taxes in the House and the Senate as well.

And I want to show our viewers something the president said during the campaign back in September.


OBAMA: I can make a firm pledge: Under my plan, no family making less than $250,000 a year will see any form of tax increase, not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.


STEPHANOPOULOS: Not any of your taxes, a firm pledge. Does that mean the president will veto any health care bill that includes a tax increase on people earning less than $250,000 a year?

AXELROD: Well, first of all, George, let's make a few points. The president has said whatever is done has to not add to the deficit. So that's one of the prerequisites for this bill. We've got issue with our budget. Everybody is aware that we don't want to add to our deficit.

So this is going to have to be paid for. Two-thirds of the expenses -- two-thirds of the expense of it under the president's plan and proposal would be done by transferring money within the health care system from Medicare on wasteful spending, giveaways to insurance and drug companies, and so on.

And so we're talking about the final third. He has proposed a plan that would be in keeping with the promise that he made, to cap deductions for the wealthiest Americans on their taxes.

He still believes that's the way to go. And he has made a strong case to the House and the Senate on it.

STEPHANOPOULOS: But he also said this week he was open to compromise on this. And as you know, the Senate is looking especially at this issue of capping the deductions for health care that employers and employees now get. That would get -- would be a tax increase for many families earning under $250,000.

But the president said he was open to it. So that means that the tax pledge he made back in September is no longer operative?

AXELROD: Well, George, first of all, there are a lot of different formulations of that plan. The president had said in the past that he doesn't believe taxing health care benefits at any level is necessarily the best way to go here. He still believes that.

But there are a number of formulations and we'll wait and see. The important thing at this point is to keep the process moving, to keep people at the table, to the keep the discussions going.

We've gotten a long way down the road and we want to finish that journey.

STEPHANOPOULOS: But if you're open to tax increases for people under $250,000, that means that the pledge he made last September in Dover is no longer operative.

AXELROD: George, I think the president has made clear the way he feels this should be funded. And certainly is consistent with what he said during...

STEPHANOPOULOS: But he's not drawing a line in the sand.

AXELROD: ... the campaign.


AXELROD: Well, you know what? The -- one of the problems we've had in this town is that people draw lines in the sand and they stop talking to each other. And you don't get anything done. That's not the way the president approaches us.

He is very cognizant of protecting people -- middle class people, hard-working people who are trying to get along in a very difficult economy. And he will continue to represent them in these talks.

But they're also dealing with punishing health care costs, and that's something that we have to deal with

STEPHANOPOULOS: One of the Republicans who is both drawing lines in the sand and still talking is our next guest, Charles Grassley of Iowa. And he has made it very, very clear what he believes has to be in a plan.

One of the things he said is, absolutely no public health insurance plan in the bill. The president has said he has made a very strong case for that this week. And Senator Grassley has also said that we're probably going to have to have some taxation of benefits.

And I guess what I'm trying to get at, is that a price that the president is willing to pay? I know you're saying that the president has laid out his preferences, but what price is he willing to pay to get Republican votes, to get a bipartisan bill?

AXELROD: Well, George, first of all, the bill will be bipartisan by definition. Just this week the Senate Health Committee, Senator Dodd has done a spectacular job in moving this along. And the Senate Health Committee accepted 82 Republican amendments.

Republican ideas are going to be included in this package. We hope it will come with Republican votes as well. But the important thing is that we solve this problem. That we begin to move...

STEPHANOPOULOS: So that's the new...

AXELROD: ... forward on health care reform.

STEPHANOPOULOS: And the chief of staff, Rahm Emanuel, has made the same point you just made. That seems to be the new White House definition of bipartisanship. It's a bipartisan bill if there are some ideas that have been advocated by Republicans, even if Republicans don't vote for the bill in the end.

Senator Grassley says, no way. It is not bipartisanship either if you include just the Republican ideas but not Republican votes, or even if you simply get six or seven Republican votes, he says that's not true, durable bipartisanship. That's not the road he's going to go down.

AXELROD: Look, I don't think we should get consumed by process at a time when health care costs are increasing at -- you know, they've doubled in decade. Out-of-pocket costs for people on health care up 32 percent, punishing families, businesses, banks, you know, ultimately will bring the federal budget down (ph).

We have to act. We can't afford to get ensnared in these kind of Washington discussions. We've got to deal with the issue that the American people are confronting.

STEPHANOPOULOS: And the American people are also confronting the issue of the economy. That is their number one issue. And some of your critics say the president has gone off-course a little bit, has lost his focus on the economy.

We had a new Washington -- ABC/Washington Post poll this week that had some fairly revealing numbers. Number one, it showed on the stimulus package, the support for people who felt the stimulus package was helping the economy: 59 percent in April, down a little bit to 52 percent. Now whether the country is going in the right direction hit 50 percent in April, had been skyrocketing since the election, but for the first time started to slip back.

How concerned are you by this? And how much are you worried about the fact that people don't believe that the president's plans -- are starting lose faith that the president's plans are actually helping the economy?

AXELROD: George, we lived through several years in which we were confronted with poll numbers that said we were 30 points behind in the race for the presidency. I confront a lot of doomsday questions from people less smart than you in this town.

And, you know, we take the long view on this. Look, when the president signed the stimulus package -- the economic recovery package, he said it's going to take a while for this to work, and we're going to go through some rough times, and unemployment is going to go up, and we've got to work -- we have to work our way through this. So...


STEPHANOPOULOS: But the money is not getting out as fast as you hoped, is it?

AXELROD: ... none of this -- none of this is surprising. What?

STEPHANOPOULOS: The money is not going out as fast as you had hoped, is it?

AXELROD: Well, I think the money -- we would like the money to go out faster in some instances, but a lot has been accomplished, and that should not be diminished. There are 4,000 or 5,000 road projects going on in this country right now that would not have gone on. There are energy projects going on in this country right now, and homes being retrofitted to be energy efficient that would not have happened. There are policemen and firefighters and teachers who are still on the job today because of that package.

So I think it's done an awful lot of good. The fact is that we're in the teeth of one of the worst recessions that we've had since the Great Depression, perhaps the worst, and we're going to have to work our way through that. And I think the American people understand that at some level, and that -- and so we're not sitting there -- the numbers we're worried about are not poll numbers. It's how many people can we get back to work, how do we get this economy moving again in the long run, and mostly how do we build a solid foundation so we're not in this bubble-and-burst kind of economy that we've seen over the last decade that leaves both our country and our families and businesses in jeopardy.

STEPHANOPOULOS: Some economists look at that, including Paul Krugman, who's going to be on this show later in the program, he says you're looking at 9, 10 percent unemployment coming in September. That's going to necessitate a second stimulus package. Is that still on the table for the president right now? And what would that mean for your other plans on energy and health care?

AXELROD: Well, first of all, I don't want to prejudge that at all. You know, as you said earlier, there's still -- most of the stimulus money, the economic recovery money is yet to be spent. Let's see what impact that has. I'm not going to make any judgment as to whether we need more. We have confidence that the things we're doing are going to help, but we've said repeatedly, it's going to take time, and it will take time. It took years to get into the mess we're in. It's not going to take months to get out of it.

STEPHANOPOULOS: Let me turn to the crisis in Iran. The crackdown appears to be working for now. The streets have gone quiet. A huge security presence in the streets. Mir-Hossein Mousavi, the chief opposition leader, has not called for new protests. And President Ahmadinejad is striking back at President Obama and the comments that President Obama made on Friday. He has said -- he's calling on the United State to stop meddling, and then he's gone on and said, "without a doubt, Iran's new government will have a more decisive and firmer approach toward the West. This time, the Iranian nation's reply will be harsh and more decisive to make the West regret its meddlesome stance."

It does appear that the prospects for engagement are diminishing, that Iran is taking a harder line.

AXELROD: Well, first of all, you know, let's be clear that we didn't meddle in the election in Iran. The dispute in Iran is between the leadership in Iran and their own people, and plainly, Mr. Ahmadinejad thinks that by -- by fingering the United States, that he can create a political diversion. So I'm not going to entertain his bloviations that are politically motivated.

STEPHANOPOULOS: Well, (inaudible) entertaining them.

AXELROD: It's just an opportunity to say "bloviate."


AXELROD: No, I'm not -- the point is this. We are going to continue to work through the P5, through the multilateral group of nations that are engaging Iran, and they have to make a decision, George, whether they want to further isolate themselves in every way from the community of nations, or whether they are going to embrace that. And understand that whatever Mr. Ahmadinejad says, everyone understands that in Iran, he is not the person who makes decisions on foreign policy, on defense policy. So this is political theater.

STEPHANOPOULOS: But the invitation is still open. If the Iranians want to come to Paris and sit down with the United States and the Europeans on the nuclear program, that invitation is still open.

AXELROD: Well, yes. And understand, you say it's an invitation. It is not a reward. We are not looking to reward Iran. We are looking to -- the nations of the P5, the five-plus-one, they want to sit down and talk to the Iranians and offer them two paths. And one brings them back into the community of nations, and the other has some very stark consequences.

STEPHANOPOULOS: Final question. I was talking to an ambassador from the region this week, who said now, if you sit down with the Iranians after everything we've seen in the last couple of weeks, you're going to be crushing the hopes of the young people in Iran and across the region, who listened hard to the president's Cairo speech and thought he was striking out in a new direction.

AXELROD: I think the president's sense of solicitude with those young people has been very, very clear, and we're very mindful of that. We are also mindful of the fact that the nuclear weapons in Iran and the nuclearization of that whole region is a threat to that country, all countries in the region, and the world. And we have to address that. We can't let that lie.

STEPHANOPOULOS: David Axelrod, thanks very much.

AXELROD: Good to be with you.

STEPHANOPOULOS: And as we bring in Senator Grassley, here is a look at how supporters of the president's plan are trying to pressure the senator in his home state of Iowa.


(UNKNOWN): That's the president's plan -- keep the coverage you have now or choose from a range of plans, including a public health insurance option to lower costs and keep insurance companies honest. Why is Senator Grassley opposed to giving you a choice? Tell Senator Grassley it's your health, it should be your choice.

STEPHANOPOULOS: And Senator Grassley joins us now from Waterloo, Iowa.

Thanks for joining us this morning, Senator.

You heard that commercial, the president's supporters trying to pressure you in your home state. You also heard David Axelrod on the president's preferences for what should be in the plan.

Bottom line, is there any kind of public health insurance option you can accept?

And will the plan you negotiate meet the president's pledge not to raise taxes on people earning under $250,000 a year?

GRASSLEY: Well, a Democratic senator has come forth with a co-op plan, that, if it's along the lines of what we have known co-ops in this country for 150 years, and that would definitely bring additional competition into the insurance industry, I think that, if it's structured along those lines, that we could have, yet, a different option than what we presently have.

And we're looking at that and we're trying to get a bipartisan agreement on that. And if it doesn't touch the concerns that we have about federal control of health and leading toward a Canadian-style single-payer system, then I think it can get bipartisan support.

But let me assure you that we're trying to find a bipartisan compromise in this area, as well as every other area. And I'm not so sure that the competition is a major thing that we have to deal with in order to get a bipartisan compromise.

George, if I could say what the overall view of my party and most everybody in Congress is, is to make health insurance affordable and accessible.

And when we say accessible, we mean taking away the discrimination that comes from preexisting conditions. And when we say affordable, affordable for people that have preexisting conditions, and also affordable for low-income people; and, lastly, to bend the curve of growth of health care. Because we can't keep on this gigantic increase in health care costs that we have.

STEPHANOPOULOS: But how about this question of how to pay for it?

You know, you saw the president, during the campaign, said he's not going to support any tax increase for people earning under $250,000 a year. But you and other senators, including some Democratic senators, are working on this plan that would take away some -- or cap the tax (inaudible) for some health insurance that employers provide.

Can that commitment the president made be kept, or will you have to raise taxes on people earning under $250,000?

GRASSLEY: From the standpoint of the president, saying that he doesn't want to do that, I think it's going to take presidential leadership to get people of his party to see that we shouldn't be subsidizing high-end health insurance policies that drive up inflation in health insurance, maybe, one or two percentage points of the seven or eight that it goes up every year.

So I'm -- I'm asking, and I think the White House knows my view and the view of a lot of other Republicans. Since the president denigrated John Cain's -- John McCain's effort to move in this direction during the campaign, it's going to take, in order to win over Republicans, presidential leadership in that direction.

Let me give you the overall view, though, for financing. I -- we Republicans and most Democrats believe that it ought to come from within the health care industry. So if you read about a trillion dollars, we're talking about reshuffling dollars within health care to make health care affordable for people that don't have it and for high-end, high-cost health insurance.

And we want to bring money from within health care, reshuffle it. So we're going to get money from the high end health insurance policies and then we're going to save hundreds of millions of dollars within Medicare that's being wasted.

Just as one example, we just -- the administration announced that they just arrested a dozen people that were involved in $52 million of fraud within Medicare. We've got to do things about that. And shifting money from it being wasted to more useful sources within health care is the direction that we're going to go.


GRASSLEY: But all from within health care, not from outside of health care.

STEPHANOPOULOS: Let me turn to the issue of energy. You heard Mr. Axelrod talk about the House passage of the cap and trade legislation. Here he said that this Republican charge that this is a broad-based tax increase is a phony issue. And he challenged Republicans, including you, to come up with an alternative.

GRASSLEY: Yes. Before I answer that question, I want to comment one thing on Mr. Axelrod said about Republicans input into the Health Committee's bill. He said they put in 83 amendments. Let me assure you, those were no policy -- changes in policy, those were strictly technical. And Republicans are not going to be hoodwinked into that being a bipartisan bill.

STEPHANOPOULOS: So you don't buy...

GRASSLEY: Now to answer your question...

STEPHANOPOULOS: Well, let me just follow up on that.

GRASSLEY: But -- go ahead.

STEPHANOPOULOS: You don't buy the White House definition of bipartisanship?

GRASSLEY: You stated my position accurately when you were interviewing Mr. Axelrod. That when we're restructuring 16 percent of our economy, that's what health care is. And when we're affecting every person in this country because this is every person in this country, then we ought to have bipartisan support.

Senator Baucus, my chairman that I'm working with on a bipartisan proposal, wants it to be overwhelmingly passed in the United States Senate. And that means bipartisanship, just not three or four Republicans going along with 58 Democrats, but a sizable number of Republicans.

And I think we have the capability of doing that if people put policy ahead of politics. And remember, policy is the best the politics. Now I forgot your other question.

STEPHANOPOULOS: It was -- he said that the issue of taxes on the energy plan is a phony issue, that it's a negligible tax increase. And he did point to these Congressional Budget Office numbers which show it's only about a $150 in 2020 for an average family.

GRASSLEY: Well, you have to give the Congressional Budget Office, because they're like God around Washington when they say something, but I'll tell you, earlier this year, we had economists telling us that when you filter all of these increases in energy through every step of the economy, manufacturing a product or whatever services might come, we have come out with about $3,000 for a family of four.

Now I won't argue $175 versus $3,000 because that's not the most important issue. You've got to look at what is happening to our economy if we put this very strong tax on energy. The people that have been complaining for 10 years about the outsourcing of manufacturing jobs to China are the very same ones pushing cap and trade.

And you're going to find signs on manufacturing doors, if this bill passes, that says moved -- gone to China. So what we have to do is make sure China, the number one emitter of CO2, not the United States, China is. And India right along with them.

We've got to have an international agreement so that we have a level playing field for American manufacturing so we don't outsource any more jobs. This should be done in a way that affects China the same way it affects the United States.

Because if the United States moves ahead by itself, we're not only going to lose those jobs, but the point is, after 30 or 40 years, we're going to reduce CO2 by less than 1 percent.


GRASSLEY: So we've got to do it on an international basis, George.

STEPHANOPOULOS: Senator Grassley, thank you very much for your time this morning. I appreciate it. Good to have you back.

GRASSLEY: Thank you.

STEPHANOPOULOS: The "Roundtable" is next with Paul Krugman, Peggy Noonan, Kathleen Parker, and Michael Eric Dyson. And later, the "Sunday Funnies."



SEAN HANNITY, FOX NEWS ANCHOR: Have you been thinking about a run for the presidency?

GOV. MARK SANFORD (R), SOUTH CAROLINA: What I learn in life is you never say never. And a lot of strange doors open and close in life.

CHARLIE GIBSON, ABC NEWS ANCHOR: A political mystery in South Carolina. The Republican governor in that state has disappeared.

UNIDENTIFIED MALE: The governor is actually hiking the Appalachian Trail.

SANFORD: God's law indeed is here to protect you from yourself and there are consequences if you breach that. This press conference is the consequence.

JENNY SANFORD, WIFE OF MARK SANFORD: His career right now is the least of my concerns. My important job right now is our children.


STEPHANOPOULOS: The saga of Mark Sanford, we're going into it on "The Roundtable" today. First let me introduce everyone. George Will is on vacation this week, but we're joined by Peggy Noonan of "The Wall Street Journal." Kathleen Parker of "The Washington Post," also The Buckley School in Camden, South Carolina. Your governor there. Michael Eric Dyson, cultural historian at Georgetown University. And of course Paul Krugman of "The New York Times" and Princeton.

And Peggy, there's so much with Governor Sanford. But let's simply begin with the performance. He used the word strange. That was one of the strangest press conferences I've ever seen.

PEGGY NOONAN, WALL STREET JOURNAL: Well, it was a little rambling.

STEPHANOPOULOS: To say the least. Yeah. We started out on the Appalachian Trail.

NOONAN: It was -- actually there was something touchingly unhandled about it if you know what I mean. He came forward. This is a man in the middle of extraordinary stress. And just decided to go forward and tell his story. And it was a riveting thing. I watched it live. And about three minutes in, I could see an admission was coming. And I had no idea what the admission was. So, it was a surprising performance.

STEPHANOPOULOS: It was odd, he started out talking about being in high school and going on the Appalachian Trail and actually built up the suspense getting to it. But he did get to the bottom line. Kathleen, he's your governor.


STEPHANOPOULOS: And I was just wondering, in character, what is this performance?

PARKER: I think the performance was a surprise to everyone. What he did by vanishing, was not so surprising because he does have a reputation for kind of taking off and stealing time and seeking out solitude which I thin is great, once you do that. But in the past, he always left a number where he could be reached. So what was way out of character was for him to disappear without any arrangements for people to get in touch. What was also out of character for anyone who knows this is something he actually did.

STEPHANOPOULOS: So, that was a surprise?

PARKER: Completely. No one who knows Mark Sanford thought they would ever hear those words from him. That he had an affair. So, it's shocking on multiple levels. But as to his news conference, with -- it was one for the annals, I think, we'll be watching that over and over.

STEPHANOPOULOS: One of the things we didn't see -- now Kathleen, Paul, says this was shocking. You write about this a little bit on your blog this week and almost suggested that this shouldn't be shocking, given the record of a lot of Republicans here.

PAUL KRUGMAN, NEW YORK TIMES: Politicians of both parties stray. The Democrats actually seem to punish their strayers more harshly.

STEPHANOPOULOS: More recently, that's been true.

KRUGMAN: Yes. At least recently, that's been true. Look, it was the most original excuse. The most original reason for staying in office, I've heard yet, which was actually very much a thing of his party. He said David didn't resign after he had his fling with Bathsheba. So, why should I resign as governor? So it's really kind of an amazing thing.

STEPHANOPOULOS: And Michael, what do you think -- it's unclear whether or not he is going to survive at this point. It also appears that a lot of the politicians in South Carolina can't decide yet whether they want him to survive or not because he is, after all, a lame duck even though he has an awful lot of enemies, they're not quite pushing him over the edge yet.

MICHAEL ERIC DYSON, AUTHOR: Yes. Well, I suspect partly it has to do with the recognition that there's a hallway of mirrors here when it comes to moralism. I mean, there's a lot of secrets being kept in a lot of closets by a lot of people who hold them.

So there's a kind of identification with Brother Sanford, Mr. Sanford, Governor Sanford, because of the silliness that's in sharp contrast to his usual control. I think there's a bigger story here, too is that yes on both sides of the aisle, people constantly stray. But the recriminations about them are in inverse proportion to their ability to beat people up who fall in public. I mean, Mr. Sanford, when he was a congressman, regaled us with story after story about why Mr. Clinton should simply resign because he was ashamed. And I think now, your words come back to bite you.

STEPHANOPOULOS: Is hypocrisy enough to take him down?

NOONAN: Oh -- I never think that when politicians, Democrats and Republicans get in these stories, that the story itself, if you will, undermines what the politician stands for, necessarily.

Mark Sanford's libertarian/traditional views are right or wrong on their own. I must say, I've been thinking about Clinton a lot. And it seems to me, in the Clinton era, during that famous story, a new devilishness was unleashed, especially in the media, where a new meanness took style.

And I feel like in every of the scandals in the past few months, and we've had so many of them, the political sex scandals, the level of meanness of the response, publicly, on cable and in the newspapers, gets meaner each time.

It seems to me that we are coming -- we are reacting, almost as a nation, but certainly in the media, as kind of puritans, without faith, which is the worst of both worlds to be puritanical and not even have faith.

STEPHANOPOULOS: The media taking it more seriously, or taking more glee in Mark Sanford's troubles, but the public may not be. The public may be saying you know what, we've seen this story before. We don't care.

PARKER: I don't think hypocrisy is the big issue for Mark Sanford. I think Mark Sanford's weirdness is the big issue. He's just acting rather strangely. And I attribute this -- I've taken the romantic view.

STEPHANOPOULOS: Truly in love?

PARKER: He's truly in love. If you read those e-mails, and I think it's appalling that they were posted. But since they were there, we went and read them. Didn't we?


PARKER: What was so clear, is this is not a bad man. This is not somebody who is using women and casually discarding them. He's not e-mailing interns and hanging out in bathroom stalls. So he actually fell head over heels, blindingly, crazy in love. And I don't know if you all remember that feeling, I have a vague notion of it, but I think I remember that you think you're invincible. No one else can see you. And you don't care.

DYSON: But it's the lack of concession of that point, the legitimacy of other people's feelings in the same way, when it comes to some of the harsh judgments that are rendered. I think this new devilishness that you spoke of, is true. Perhaps the media itself sees its own mortality flashing before their eyes because there are a bunch of secrets in the media as well, we all know.

So I think that my problem is, is have that same kind of capacity for empathy and compassion, when you're dealing with I don't know, health care, welfare reform? How about taking $700 million in stimulus money?

Sanford, you want us to understand. And I completely do, given my own sin and recognition of my own frailty.

PARKER: Do you want to talk about it?

DYSON: Not at all. But what I am suggesting, however, is that feel that simple kind of empathy and compassion in other elements of your political life, not just in your heart.

PARKER: I agree. But the thing that people do like about Mark Sanford, he's a true government reformer. And that's why he has so many enemies. And by the way, there is a drip, drip, drip in South Carolina.

STEPHANOPOULOS: Well, that's the other big problem. He may end up getting caught up because he did arrange for the business trip to go to Argentina when it wasn't supposed to in the first place. That's usually taxpayers dollars.

The other question is, what does this all mean for the Republican Party? I want to put up the potential candidates for 2012, on the Republican Party. We now have about three left. We have Governor Sanford, Senator Ensign no longer being considered, either.

And, Paul Krugman, I wonder what you think. What does this mean overall? How much does this hurt the party and its field for 2012?

KRUGMAN: It's a pretty weak field in any case. And so you're talking on a few people who seemed more different. Unfortunately it turns out they're different in ways that weren't anticipated.

You know, there's no compelling figure. It's amazing how little depth there is on the bench. There's basically no bench at all. So I'm not sure that Sanford was really a plausible candidate in the first place except that nobody outside his state knew very much about him.

And now, there's one less. And it's a problem. Remember, moral values was supposed to be part of the appeal to the party. While it doesn't seem to bother Republicans too much, if somebody engages in this kind of hypocrisy, it does seem to bother voters.

STEPHANOPOULOS: I was struck this week in "The Wall Street Journal" this week, Peggy, by Bob Inglis of South Carolina, congressman of South Carolina, he said it's time for the party, and this is a quote, "to lose the stinking rot of self-righteousness."


DYSON: Hallelujah.

NOONAN: This is very complicated. Self-righteousness, yes. Lose it. I would love it if all Republicans who believe in serious conservative values and ideas would come forward and say, this is what I stand for. By the way, I'm a jackass. Just be modest going in. This is what I stand for. I am imperfect. You are imperfect. That doesn't mean the things that we're arguing for and trying to push forward are themselves delegitimazed by what core losers we are. It seems to me, look, I've been thinking about this a lot. European Catholics got it right for millennia. Their general attitude was not puritan and narrow, so much as it was, you are a sinner. Try to govern well. Go to confession a lot.

KRUGMAN: This is exactly, I put this on my blog, that it's a liberal conservative. If a liberal sees somebody who talks about moral values and does something like this, and they call it hypocrisy. A conservative looks at it and says, well, but at least he stands up for moral values. It's very, very different.

PARKER: It makes perfect sense, though, that the person who most wants to be good is also going to be the one who falls the hardest. And you know, we try to kind of repair what's wrong in our lives with our public work. And so the Republicans are always going to look worse when they fall.

NOONAN: And they cannot achieve perfect, or they think they're arguing for some good thing.

DYSON: But I think it's the harsh judgmentalism.

DYSON: It's not the fact that the concession of the fact that you're going to mess up. That's true. We all know that coming in the door.

But the Republicans -- or more broadly, the conservatives, tend to think that they have got some kind of copyright or lock on appropriate behavior, that the liberals or the leftists are the ones who are going to hell in a hand basket. And God forbid, when we mess up, at least we're heading in the right direction. But when the liberals mess up, not only are they messing up, but they're messing up on the way to hell.

So I think that ultimately...

PARKER: I think we've heard the last of it. I don't think you're going to hear any Republicans speaking bluntly about...



STEPHANOPOULOS: I'm with Kathleen. I think we're going to see this debate shift. And I'm also going to shift the debate right now. Thank you for that segue to the debate we had at the top of the show, on the president's agenda this week. We saw him pushing quite hard.

And, Paul, I want to come to you first here. What you saw from David Axelrod is, you know, clearly, we're going to try to keep going on all fronts. But health care is the top priority. And a real discipline, and we saw the same discipline from the president this week. They simply are not going to draw any kinds of lines in the sand.

They have seemed to have to internalized this idea, what we need more than anything else on health care is something we can sign into the law, not -- don't care too much about the details.

KRUGMAN: But the details do matter, which, of course, is what I've been writing. That if you have a health care reform that's so badly constructed that it's going to fail, then you end up doing a great deal of damage.

So they do have to hold out for a certain basic minimum. And they -- you know, they are...

STEPHANOPOULOS: Does that mean a public option? KRUGMAN: You know, it probably does. But one would have to look at what's in there. But there's a reason for the public option, which is that we are not sure. The big issue is going to be cost control. And you want to try everything you can to control costs. And the public option is something that might do a lot. It might not, but it's one of those things that looks plausible. And you don't want to miss any opportunity because there's so many things that can go wrong.

I'm really struck when Grassley talks. You know, he talks about free markets, he talks about competition. There isn't any competition in this lots of this market. Iowa, 71 percent of health insurance in Iowa is supplied by just one company, Wellmark.

So we're talking about, you know, actually giving people more choice, more competition. Why shouldn't that be a central plank of the reform?

NOONAN: Oh, my goodness. Well, you know how I feel, from my column this week. I think things have become a little bit scattered.

Paul, if you just limit this conversation to taxes alone, you have some sense that people, normal humans in America, might be getting a little bit nervous about health care and energy care and all of this stuff.

America has a huge deficit. We've never seen anything like it before. Spending is very big. Warren Buffett, who people tend to trust on economic matters, said, look, this energy thing the House just passed is a big tax.

Health care, the Congressional Budget Office says, is probably $1.8 trillion over the next 10 years.

KRUGMAN: No, they're -- that's not...

NOONAN: Well, without getting into the weeds, you have got to assume it's going to cost money. We've got California going under. We've got New York, with, I think, a $20 billion deficit. They're going to be raising taxes.

Income tax is going to be going up. At a certain point, you've got to realize, people are going to say, whoa, this is no good.

STEPHANOPOULOS: Even if it's only a trillion dollars...

NOONAN: You've got to stop this...

STEPHANOPOULOS: ... which is probably what the health care will be.


DYSON: Well -- but, yes, I think about -- well, especially on the energy bill, right, they're trying to, you know, get the 2005 standards. If we can get like 18, 17 percent by 10 years, and then 83 percent of these emission standards by, say, mid-century, I think, look, in about 10 years, the tax is $175 per citizen, maybe $40 if you get a rebate if you're poor.

The point is, you're paying a tax, however, on the preservation -- I hate to sound cosmic here, but on the preservation of the environment. I'm sure that Chancellor Merkel and Al Gore are toasting each other this morning because -- this doesn't go nearly far enough, I disagree with Warren Buffett. I mean, I agree with him that it's about a tax...


STEPHANOPOULOS: ... a tax, but you're saying it's a tax worth paying...


DYSON: Let's not lie. Let's not lie about it. It's a tax. It's worth paying. It's the environment. It's about these carbon dioxide emissions that we've been trying to deal with for years and years and years. And I think the celebration is, you couldn't even imagine this with George Bush even last year, that this conversation could even happen or that...


KRUGMAN: Can I say something? I wish Warren Buffett would actually study this issue as careful as he studies the companies he invests in. Because the fact is, if you do this thing carefully, it turns out, that the Congressional Budget Office says it, EPA says it, everybody looking at serious study says, this is not a large tax.

That, you know, we're talking about giving a market incentive for people to take greenhouse gas emissions into account. And markets are a great thing. It's a funny thing on this debate, the people who believe that markets can solve all problems believe that confronted with a small incentive to do less greenhouse gas emissions, the whole economy will fall apart.

PARKER: Yes, well, it's certainly not my habit to argue with economists or Warren Buffett, but I agree with Peggy, I think people are very wary of so much happening so quickly. You know, Obama is moving faster than a speeding bullet, and everybody's head is spinning.

STEPHANOPOULOS: He thinks this is his moment.

PARKER: It is his moment.

PARKER: And he's in a hurry, because he wants to get as much in place as he possibly can before people wake up and say, wait a minute...

NOONAN: He may be overplaying his hand, and if he is, it will be unlucky for the Democrats in 2010. Although I happen to think the luckiest thing, long-term, that could happen to Obama is he gets a Republican Congress and he'll be saved, like Clinton was in 1994. That would be a good thing for Obama. And he's a lucky guy, so he may get lucky. But they better watch out for overplaying his hand.

PARKER: I think you're exactly right.

DYSON: I think the -- look -- look, two things. First of all, the sharp contrast between a lethargic, inactive, it seems to be unaggressive in the appropriate sense, White House, is in sharp contrast to what Obama is doing now. He gets an A-plus for that.

But No. 2, I joked before an NAACP audience this week as that, look, a black man in the White House thinks, look, they might change the rules in mid-stream. I got to get everything I can get done right now to make sure the things don't (inaudible).

But I don't think that with his ambition, he lacks the ability to put people in place, or at least to organize his bully pulpit to inspire people to take more responsibility. And I think that's what's going on.

PARKER: He has to be careful, because he's said some things that are not precisely true, and this is going to trip him up. I mean, when the details do come out -- when, for example, he says you are not going to have to change your health plan. If you like it, you can keep it. Well, that's kind of true, but not really completely true, because if your employer decides to go with a different plan, to go with the public plan, then you don't get to keep your health care.

KRUGMAN: But that's always true. That's always been true.

PARKER: But those little things will get in his way unless he's more forthcoming.

KRUGMAN: When did the truth ever catch up with his predecessor? No, actually...

(LAUGHTER) KRUGMAN: Let's just be concrete here. Did the passage of Waxman-Markey, the climate bill, did that actually make the passage of health care less likely? Seems to me more likely. There is a sense of momentum. He's getting stuff done. It is in fact building. These different initiatives are actually reinforcing...

STEPHANOPOULOS: Winning begets winning. I do want to, before we leave here, we have a couple of minutes left, and the week really was dominated, as much by anything else, by the loss of three people everyone felt like they knew. First of all, Ed McMahon, at the beginning of the week.




STEPHANOPOULOS: Twenty years on Johnny Carson's couch. He was in our living room every single night. Someone else who came in our room is Farrah Fawcett, with "Charlie's Angels" back in the 1970s. And as a teenager in the 1970s, I was one of the 10 million who had that poster. I think every teenage boy my age had it in their house. And finally, of course, that was overshadowed by Michael Jackson.

We first saw him first become a star as a little boy, 9 years old. A superstar in 1983 with "Thriller," best-selling album of all- time. And that moonwalk that he did on the 25th anniversary of MTV. Everyone remembered it. And then 20 years really of pain, drug abuse, charges of child abuse. And he also really seemed to transform in front of our eyes.

And Michael, I want to come to you first on this, because I have got to tell you, personally, I was struggling, as we watched all this, whether we're all paying just way too much attention to all this. I know there are an awful lot of people who feel the other way. Try to put it in context.

DYSON: Well, I think, that, obviously, Farrah Fawcett, and you and I and millions of other guys, and I suspect women, certainly saw her as an icon. But it's not just that poster. It's also "The Burning Bed," right? That she -- just "The Burning Bed" and what that meant to...


DYSON: Ed McMahon, look, you can be a second banana, but you can make that a first-rate career.

Michael Jackson, I think, look, represents -- I don't know, a film for the real-life version of "The Curious Case of Benjamin Button." Born as a shriveled old man, he dies as a youth. Michael Jackson as a 9-year-old prodigy. We have to go back to people like, I don't know, Mozart composing at 4 and 5. Michael Jackson knew at the age of 6 that he liked William Hart. Who's William Hart? The lead singer of the Delfonics. What 8-year-old kid knows who William Hurt is? That's the kind of genius he possessed. And he was seen as a miniature adult wrapped in this, you know, chocolate cherubic face Afro halo. And there he was, representing for the world.

One, he was signed the year Martin Luther King Jr. was murdered. The next year, he and his brothers formed the Jackson 5 to take the post-soul civil rights generation forward. And I think that in that sense, the tragedy is though, is that later on in his life, with all these accusations, the whitening of his skin, the Europization of his image, lost what he was on the inside. And that was a metaphor for black people in large.

NOONAN: Interesting. I think there's so much to say there.

Look, it struck me that we're making a big deal of these deaths this week, in part because that kind of fame is something of the past. We'll never see people as famous as they were again. Why? Our culture was more unified 40 and 30 years ago. And someone who was famous and broke through, we all knew who they were.

When Michael danced at the Motown -- at the 25th anniversary thing for Berry Gordy, I was at home watching it live. I was about 30. My cousin, who was 10, was watching. My parents who were in their 50s were watching. That was a unified culture, watching certain people. We've lost those days.

STEPHANOPOULOS: We have lost them. I wish we could...

NOONAN: We miss them. In part what we celebrate is missing them when they leave us.


STEPHANOPOULOS: I want you guys to continue this -- I want you guys to continue this in the green room. It's a fascinating discussion, but we don't have time for this right now.