GEORGE STEPHANOPOULOS, HOST: Good morning, and welcome to "THIS WEEK."
STEPHANOPOULOS (voice-over): Welcomes abroad. BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have the blood of Africa within me.
STEPHANOPOULOS: Warnings at home.
REP. MARIO DIAZ-BALART (R), FLORIDA: There is a new definition for "dismal failure": stimulus -- this stimulus.
JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: What would they
do? What would they do?
STEPHANOPOULOS: The stimulus takes shots. Health care stalls. Is it time for President Obama to hit the reset button with Congress or should he stay the course? Questions this morning for our headliners, the Senate whips: Democrat Dick Durbin and Republican Jon Kyl, our "THIS WEEK" debate.
KATIE COURIC, CBC ANCHOR: The King of Pop...
BRIAN WILLIAMS, NBC ANCHOR: Michael Jackson...
CHARLES GIBSON, ABC ANCHOR: Michael Jackson...
UNIDENTIFIED MALE: Michael Jackson...
COURIC: Michael Jackson...
STEPHANOPOULOS: Michael Jackson mania. Did the media go too far? That and all of the week's politics on a special expanded "Roundtable" with George Will, Donna Brazile, Cokie Roberts, Sam Donaldson, and Bob Woodward of The Washington Post.
And as always, "The Sunday Funnies."
CONAN O'BRIEN, HOST, "THE TONIGHT SHOW": A lot of us are still mourning the loss of one of America's most entertaining figures who left us all too soon, but don't worry, folks, Sarah Palin will be back.
ANNOUNCER: From the heart of the nation's capital, "THIS WEEK" with ABC News chief Washington correspondent, George Stephanopoulos, live from the Newseum on Pennsylvania Avenue.
STEPHANOPOULOS: Hello, again. It was another whirlwind week abroad for the president and the whole Obama family, touched down in Washington early this morning for what may be the most momentous month of the year on Capitol Hill.
Confirmation hearings for Judge Sotomayor begin tomorrow. But the House and Senate are trying to pass health care by August, but the odds against that going up. And despite calls from some to scale back his agenda, President Obama doubled down this morning, writing in The Washington Post that now is not the time to defer hard decisions.
Here to debate all that is coming up, the two Senate leaders in charge of counting the votes: Democrat Dick Durbin, and Republican Jon Kyl. Welcome both back to "THIS WEEK."
And, Senator Durbin, let me begin with you on the issue that probably most directly affects most Americans, that's health care. Your counterparts, the House Democrats, are carrying forward a piece of legislation that includes a $550 billion tax increase, with a surtax of about 1 percent that starts for individuals earning about $250,000 a year, climbing to 3 percent for individuals earnings a million dollars a year or more.
Can Senate Democrats sign on to that?
SEN. RICHARD DURBIN (D-IL), WHIP: I think we're going to have a different approach. We understand that we have to combine cuts in actual spending on health care, savings from hospitals, from doctors, from health insurance companies, along with some new revenue.
Now this new revenue is not just to cover those who are uninsured today, but to make sure that insurance is affordable for people...
STEPHANOPOULOS: New revenue but not a surtax on millions -- on people earning over $250,000 a year?
DURBIN: The Senate Finance Committee is considering a lot of different options. I don't want to preclude or select any option at this point. But I think what we need to do is to make sure that at the end of the day, we have real health care reform.
The American people are committed to change, George. There is resistance, of course, among some Republicans in the Senate. But this has been a good week. A number of Republican senators came forward, met with Senator Harry Reid, continued to meet with Senator Baucus.
I think we're starting the kind of bipartisan dialogue that's going to work.
STEPHANOPOULOS: I want to ask Senator Kyl about that bipartisan dialogue. But first, on this tax increase.
SEN. JON KYL (R-AZ), WHIP: No.
STEPHANOPOULOS: Absolutely not.
KYL: No. Here is the problem. We're in a recession. We know that between 75 and 80 percent of the jobs created in the country are created by small business. At least 55 percent of the income that would be generated by this surtax directly hits the entrepreneurs who run these small businesses.
It would be a job killer. It would be exactly the wrong thing to do any time, but especially when we're in the middle of a recession.
STEPHANOPOULOS: How about these bipartisan negotiations? Senator Charles Grassley, your ranking member on the Finance Committee, which you are also a member of, has been negotiating with Senator Baucus and others. He met with Harry Reid, as Senator Durbin just said.
But I have been told that you've had some very tough conversations with Senator Grassley and that you've warned him against giving away too much to the Democrats. Is that true?
KYL: Well, no. I haven't warned him about anything. But it is true that we've had a lot of discussions internally in our Republican Conference, and that senators Hatch and Grassley and Enzi and Olympia Snowe, who did meet with that bipartisan group, I think sent a very strong message.
No on these taxes. No on the kind of mandates that the Democrats are talking about, including a government-run insurance company. So while Republicans all...
KYL: George, can I just make one quick point? Republicans are very committed to reform. But we do not like the ideas of spending and taxing and creation of more deficit in order to achieve these results.
STEPHANOPOULOS: No. But Senator Grassley has talked about other tax increases, not taxing the -- taking away the exclusion for health insurance plans right now. He has also talked about a public insurance plan based on the idea of cooperatives.
On those issues, does he speak for the Republican Conference?
KYL: No. And I certainly disagree with any kind of government- run plan. I don't think it's fair to say that Senator Grassley has supported any of these tax proposals. He has been very wary of the tax proposals.
Think about this, if you have a catastrophic health event in your life, you can take -- if it represents more than 7.5 percent of your gross adjusted income, for income tax purposes, you can take a deduction on that.
They're asking to raise this up to 10 percent. Most of the people hit by that are seniors and 55 percent of them are making under $50,000 a year. These are bad tax policies.
STEPHANOPOULOS: So, Senator Durbin, you heard Senator Kyl right there. He says that no public health insurance plan, I hear a no on any kind of revenue enhancement. So is a bipartisan deal really possible? And how necessary is it? DURBIN: Senator Kyl is not ready for change and I guess that's his position. But most Americans are ready for change. They want to keep the health insurance that they have, if it's good policy. But they want us to fix the things that are broken in this system.
When Senator Kyl says he is opposed to any kind of government-run health insurance, is he opposed to Medicare? That covers 45 million Americans today, another 60 million covered by a government plan called Medicaid.
I mean, the fact is overwhelmingly, three out of four Americans say we should have a choice as Americans of a government-run insurance plan. It's a choice we can make voluntarily. It brings competition in the system.
The resistance to this idea comes from the health insurance companies. Those private companies that are making a fortune in profits today, denying coverage to individuals, fighting with our doctors about the cure that we receive.
There should be competition...
STEPHANOPOULOS: But, Senator...
DURBIN: We should keep them honest.
STEPHANOPOULOS: ... the talks did at first bog down this week and then seem to pick up again towards the end of the week. Is it still possible for the Senate to pass a bill by the president's deadline of the August recess?
DURBIN: Yes, it is. And I'm glad that President Obama went overseas for critically important meetings with world leaders. Now I'm glad that he's home. He's going to be rolling up his sleeves. We've already been in communication with the White House.
He wants to get this job done. And that means the Senate should move in an expeditious way to finish our committee hearings, bring this bill to the floor before the August recess.
STEPHANOPOULOS: I'm going to ask Senator Kyl that question as well. But let me broaden it out as well, because there has been a lot of talk this week also about the stimulus and whether or not it has really helped the economy.
You told -- you put out a statement earlier this week, you said that the stimulus ought to be canceled. But your own governor, Republican governor of Arizona, has talked about the successes of the stimulus in the state of Arizona, pointing to 24 highway projects creating 6,000 jobs, a weatherization program creating 1,500 jobs, a series of programs for child care and education that have all helped the state of Arizona.
So why do you want to cancel a program that your own Republican governor said has helped your state? KYL: Well, I don't want to leave that health issue without, first of all, reiterating the fact that Republicans very much want reform, but not on the backs of the American people with the kind of taxes and potential rationing of care...
STEPHANOPOULOS: Done by August?
KYL: ... that would result. There is no chance that it's going to be done by August. President Obama was right about one thing. He said if it's not done quickly, it won't be done at all. Why did he say that? Because the longer it hangs out there, the more the American people are skeptical, anxious, and even in opposition to it.
STEPHANOPOULOS: And that ties into the complaints you've made about the stimulus.
KYL: That then -- yes.
STEPHANOPOULOS: And that brings us right back to that.
KYL: Yes. And with respect to the stimulus, I think it's now acknowledged, it hasn't done what it set out to do.
STEPHANOPOULOS: But your government says it has in Arizona.
KYL: No. What our -- look, all governors like "free money" coming to the state. My governor is no different. But the reality is that it has added to our deficit. We're now going to have a $1.8 trillion deficit this year.
It promised to create 4 -- or save 4 million jobs. We've now lost another 2 million jobs. Unemployment is 2 points higher than it was when the president took office. And even with the stimulus, it's higher than they said that it would be without the stimulus.
The reality is it hasn't helped yet. Only about 6.8 percent of the money has actually been spent. What I proposed is, after you complete the contracts that are already committed, the things that are in the pipeline, stop it.
You can spend about half of the money on the stimulus and the last half would be spent during the eight -- last eight years of a 10- year period. Why spend that money when it could be put to better use on other things like health care, for example?
And we're digging this deficit hole even deeper than we have today.
STEPHANOPOULOS: What's the answer, Senator Durbin?
DURBIN: Well, the answer is this, it's a two-year plan and we're four months into it. The Republicans resisted President Obama's efforts to put together the stimulus package. And at the time that he made the proposal, our economy was in freefall.
We were facing a worldwide recession. It's true that we're not out of the woods yet. We still have a long way to go. But we have started to stabilize our economy and the world economy. And that's a move in the right direction.
What Senator Kyl fails to acknowledge is that we have actually written checks so far for $56 billion out of $787 billion. We are going to see the impact of the stimulus package start to grow.
STEPHANOPOULOS: But Senator...
DURBIN: Well, first let me tell you, George. First it means tax breaks for working families. Does Senator Kyl oppose that? Would he cancel those?
Secondly, it means transportation projects across America, in Arizona, in Illinois, and other states, not only creating good-paying jobs but building America's infrastructure for the future.
Does Senator Kyl oppose that?
I think these are good investments in America's future. Let's give it time to work.
STEPHANOPOULOS: I think you (inaudible) answer, but let me just follow up, one more question on this. With the jobs situation and the whole economy being so much worse than everyone expected, several months ago, why not focus on that right now?
Several people have said that President Obama should scale back his agenda, right now, and put all of his focus on the economy.
DURBIN: George, because that president understands that, if we want to build this economy for the future, it isn't just a matter of saving and creating jobs today; it's doing the fundamentals to make sure the American economy is strong at the end of this recession. It's taking care of a health care system.
Senator Kyl said that the idea of health care reform is a job- killer. Let me tell you, health insurance premiums today are job- killers. The cost of health insurance, I'm sure, in Arizona; I can guarantee you, in Illinois, is going up three times faster than the increase in wages. We just can't sustain that.
Secondly, the president says, in addition in to health care reform, do something about America's dependence on foreign energy. Let's not only be sensitive to the environment but sensitive to the fact that economic growth demands a sensible, sustainable energy policy.
KYL: George, I...
DURBIN: We can do these things. KYL: ... I did not say health care reform is a job-killer. I said imposing taxes on small business to pay for health care reform is a job-killer. And it is.
And there's something else fundamental about economic recovery. The government doesn't create jobs, except more government jobs.
It was interesting, a bit amusing, to find that some of the jobs created by the stimulus bill were to hire people to apply for more federal grants. That's not the kind of jobs that we want to create.
The private sector creates jobs. And you don't support the private sector creating jobs by imposing more taxes on it.
STEPHANOPOULOS: Let me switch subjects, here, because there's a pretty startling allegation in this morning's New York Times.
The headline is "Cheney is Linked to Concealment of CIA Project."
And both of you gentlemen have served, in the past, on the Intelligence Committee.
According to this article, the Central Intelligence Agency, at the beginning of this decade, for eight years, withheld information on the secret counterterror program at the direct orders of the vice president.
This is according to two people with direct knowledge of the matter. They say that Leon Panetta told the intelligence committees that.
Senator Durbin, do you think this has to be investigated?
DURBIN: Absolutely, it does. Let me tell you, we have a system of checks and balances. There's accountability in our Constitution. The executive branch of government cannot create programs like these programs and keep Congress in the dark. There is a requirement for disclosure.
It has to be done in an appropriate way so it doesn't jeopardize our national security, but to have a massive program that is concealed from the leaders in Congress is not only inappropriate; it could be illegal.
STEPHANOPOULOS: So you want the Intelligence Committee to look into this?
STEPHANOPOULOS: Senator Kyl?
KYL: I believe they are. And in any event, Leon Panetta, the CIA director, has come forward with information. He said the CIA doesn't mislead the public. And specifically, in response to House Democrat allegations that the CIA had misled, he said that's not true.
So I don't think we should be jumping to any conclusion. Moreover...
STEPHANOPOULOS: But he also said, according to this article...
STEPHANOPOULOS: ... that Cheney ordered this program to be kept secret?
KYL: The Republican leader on the Intelligence Committee in the House described this certainly not as some kind of massive program but something that was on again, off again...
STEPHANOPOULOS: Never got off the ground, actually?
KYL: ... and actually never got off the ground.
STEPHANOPOULOS: But this allegation of the vice president ordering it to be kept secret -- do you believe that should be investigated?
KYL: Look, the president and the vice president are the two people who have responsibility, ultimately, for the national security of the country. It is not out of the ordinary for the vice president to be involved in an issue like this.
STEPHANOPOULOS: But to order it be kept secret?
KYL: What if it's a top-secret program? Of course, he and the president would both be responsible for that. Let's don't jump to conclusions is what I'm saying.
STEPHANOPOULOS: Senator Durbin?
DURBIN: I can just tell you, we know that Vice President Cheney played an unusual role with President Bush in the early days of the administration. That seemed to change over time.
But it is inappropriate for the vice president or the president to be ordering that a program be kept secret and not disclosed at the highest levels of congressional leadership.
We have to have a check and balance in our system. To give to the president unbridled power and authority goes way beyond what our Constitution has in mind.
STEPHANOPOULOS: Also, Attorney General Holder, as reported by Newsweek, Senator Kyl, that he's looking at -- hasn't decided yet, but looking at appointing a criminal prosecutor to investigate whether CIA interrogators went outside the law, went outside their guidance during interrogations.
Would you support that kind of an investigation?
KYL: The president himself has said that it's out of bounds to in any way go after people in the U.S. government who were asked or ordered to do investigations.
STEPHANOPOULOS: ... about this is those who went outside of that guidance.
KYL: Well, it's always a question of whether you pursued the orders that you were given. Obviously we don't want to protect people who have broken the law. But the problem with some of Democratic friends is that they simply believe that people who followed the law should be prosecuted.
The president and the attorney general both have said that's not going to happen because of the effect it would have on the morale of our agents, CIA and other agents who are asked in very dangerous situations to get this information to protect the American people.
We don't want them to be afraid to ask questions that can save lives.
STEPHANOPOULOS: Senator Durbin?
DURBIN: And we don't want the attorney general to be afraid to ask questions when it comes to violations of the law. I agree with Senator Kyl, those who followed the law, followed their directions, did it appropriately, whether in intelligence agencies or military agencies, certainly should not be prosecuted.
But those who went beyond it, those who broke the law need to be held accountable. No on is above the law.
STEPHANOPOULOS: Finally, we're at Judge Sotomayor -- her confirmation hearings begin tomorrow to be Justice Sotomayor on the Supreme Court.
Senator Kyl, you've been described in your hometown newspapers as masterminding the Republican strategy for these confirmation hearings. What is the strategy?
KYL: Well, the strategy is to be as thorough as we can in examining her record, what she has said, and to conduct the hearings in a fair, impartial, and thorough way, and then make our decisions. And I think Republicans have done a good job of that.
It's interesting that I just reviewed the Rasmussen poll, most recent poll about American public opinion about Judge Sotomayor. They oppose her confirmation, only 37 percent support it. And I found it interesting that among women, by a majority of 9, they oppose her confirmation. Hispanics and Asians, by a majority of 11, they oppose...
KYL: Oppose her confirmation. This is the Rasmussen survey that ended June 30th. And even independents by, I think, 23 points, oppose her confirmation.
So these hearings are going to be very important for her to demonstrate that she should be confirmed to sit on the Supreme Court.
STEPHANOPOULOS: Senator Durbin, you get the last word. Are you confident she can quell these questions of bias that have really been the flashpoint for the first several weeks of this process?
DURBIN: Absolutely, she received the highest possible rating from the American Bar Association, has more judicial experience than any nominee in the last 100 years, the support of law enforcement groups.
She has a compelling life story. She is a restrained and moderate jurist who was put on the bench initially by Republican President George Herbert Walker Bush and promoted by President Clinton. She's an exceptional person. I believe she's going to do very well.
And let me tell you, George, give her high marks. She has met face-to-face now with 89 senators, answered all of their questions. I think she has done an exceptional job preparing for this hearing.
STEPHANOPOULOS: All of that and a cast. We'll all be watching tomorrow.
We're going to go straight to "The Roundtable" now. So as our panelists take their seats. Take a look at these moments from confirmation hearings past.
(BEGIN VIDEO CLIP)
SANDRA DAY O'CONNOR, SUPREME COURT JUSTICE, THEN-NOMINEE: I'm over the hill, I'm not going to be pregnant anymore.
CLARENCE THOMAS, SUPREME COURT JUSTICE, THEN-NOMINEE: This is a circus, it's a national disgrace. And from my standpoint as a black American, as far as I'm concerned, it is a high-tech lynching.
RUTH BADER GINSBURG, SUPREME COURT JUSTICE, THEN-NOMINEE: No hints, no forecasts, no previews.
SAMUEL ALITO, SUPREME COURT JUSTICE, THEN-NOMINEE: I have to think about people in my own family who suffered discrimination because of their ethnic background, or because of religion or because of gender.
(END VIDEO CLIP) STEPHANOPOULOS: And with that, let me bring in "The Roundtable." I'm joined, as always, by George Will, Donna Brazile, Bob Woodward of The Washington Post, Sam Donaldson, and Cokie Roberts.
And, George, we just heard Senator Kyl talk about the Republican strategy right there. And he had some surprising numbers that I hadn't seen about possible opposition to Judge Sotomayor. But this is pretty much a forgone conclusion.
GEORGE WILL, ABC ANALYST: It is, not least because the Democrats have, and given the candidate it's not surprising, cast this as a question of biography, that her personal attributes are all-important.
There will be two contentious matters. One is the Ricci decision. The lead fireman from the New Haven case is going to testify. And Republicans will stress that all nine justices on the Supreme Court faulted the handling of three-judge panel on which...
STEPHANOPOULOS: Even though not all nine voted that way?
WILL: That's right. But even in the 39-page dissent by Ruth Bader Ginsburg, it was faulted. So they all rejected that.
Second, the "wise Latina" comment. And the question is going to be asked her, I'm sure, why is the statue of justice blindfolded? What is it that the law is not supposed to notice and take cognizance of?
STEPHANOPOULOS: And, Cokie, my...
COKIE ROBERTS, ABC ANALYST: The statue of justice has its ears still open and can hear a wise Latina. And I think that here there are differences of tone and accent that will make a difference.
STEPHANOPOULOS: And she'll also point to her record and say, if you look at my record, it's not a record of bias.
ROBERTS: Oh, of course, of course. And we've also just heard that she met with 89 senators. So, you know, she has gone through the worst of it already.
STEPHANOPOULOS: She certainly has.
One thing, I was surprised at, Donna, George talked about this Ricci decision. And one thing that Frank Ricci, the firefighter, is going to actually testify at these hearings. But you're starting to see some complaints that Democrats have asked for more investigation of his background.
They say he's litigious. That seems to be like playing with fire. DONNA BRAZILE, ABC ANALYST: Well, first of all, I don't think the judge will have any problem explaining her reasoning between the Ricci decision, because at the time that was the law, the equal employment opportunity law, Title VII.
What the Supreme Court did was set aside that law and made a new ruling in order to rule in favor of the white firefighters. I don't think she will have any problems explaining that, her "wise Latina" comment in the context of 17 years of being on the bench, and that she has followed the rule of law throughout her entire career.
STEPHANOPOULOS: One thing, though. Sam, she's been 17 years on the bench but has not had the kind of experience arguing before the Supreme Court like John Roberts had or teaching constitutional law recently.
So I know that her advisers are setting expectations a little bit low, saying you can't expect to have some kind of a brilliant constitutional scholar here?
SAM DONALDSON, ABC NEWS: Well, maybe not. But it's interesting to me that the Republicans have adopted a, kind of, a three-P strategy, posturing -- here I am; I have questions -- pandering to a party base, which seems to believe that anyone to the left of Genghis Khan is not acceptable -- and positioning, which is probably wise, in case the president should, in his next appointment, lose track of where he is and appoint someone like, you know, Harriet Miers.
Let me just say that I would remind you that Antonin Scalia, the fierce conservative on the court, was confirmed at a time that Democrats controlled the Senate. He was confirmed 98-0, two Republicans being absent who would have voted for him.
I think she'll be confirmed handily, and I hope with a few Republican votes.
STEPHANOPOULOS: She'll be confirmed handily; I think that's right.
But these are different days, Bob Woodward. And I think in part because of the Democrat strategy against Judge Alito that we just saw there. President Obama, Dick Durbin, several other Democrats -- 25, I think -- joined a filibuster. More than that voted no.
So we're not going to see a 98-0 vote, here, or anything like that?
BOB WOODWARD, WASHINGTON POST: I expect not. You know, there's always the surprise factor. Somebody may come up with something. She may say something that's controversial. She's quite capable of that.
What I find interesting is how much she wants this job. If you look at her biography, she prepared all of her life for it. She really has experience.
Apparently, when Obama met with her, she -- she really blew him away on the constitutional law issues, which she understands. The question is, if she's confirmed, what's her impact going to be on the court?
And she has the potential -- because she wants it so badly, she is an engaged judge. She cares about these things -- becoming a playmaker on the court and having an impact beyond just one vote.
STEPHANOPOULOS: So watch her relationship with Justice Kennedy?
One assumes that, until a conservative retires and is replaced by a liberal, Justice Kennedy will remain what he is today, the center and master of the universe.
DONALDSON: And wanting something is not something that's a bad thing.
BRAZILE: No, no.
DONALDSON: I mean, I think, to get some place, you have to want it desperately.
WILL: But this isn't going to be nearly as much fun because Joe Biden has been elevated off the committee...
... to the glory of the vice presidency. Because when he -- his first question to Sam Alito -- the question was 8 1/2 minutes long.
STEPHANOPOULOS: That record will not be broken tomorrow.
We'll all be watching. We'll also going to come back in just a minute and talk about health care, the economy, and those new investigations. We'll be right back.
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OBAMA: An excellent opportunity to put U.S.-Russian relations on a much stronger footing.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
OBAMA: Sasha was walking down one of the halls of the Kremlin yesterday. She had her trench coat on, had her pockets in her trench coat. We called her Agent 99.
(END VIDEO CLIP)
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OBAMA: The United States has sometimes fallen short of meeting our responsibilities.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
OBAMA: I'll never forget the image of my two young daughters, the descendants of Africans and African-Americans, walking through those doors of no return.
(END VIDEO CLIP)
STEPHANOPOULOS: President Obama overseas. You heard Senator Durbin say he's glad President Obama is back home.
Let me bring our roundtable back in, George Will, Donna Brazile, Bob Woodward, Sam Donaldson and Cokie Roberts.
And, George, while the -- the president was overseas, there was so much talk here about the economy, sparked in part by what Vice President Biden said on this program last week about how they misread the economy.
(BEGIN VIDEO CLIP)
VICE PRESIDENT JOSEPH R. BIDEN JR.: We and everyone else misread the economy.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
OBAMA: What Vice President Biden was referring to is simply the fact that, when we passed the stimulus, we hadn't gotten the full report of first quarter contractions in the economy. So there's nothing that we would have done differently.
(END VIDEO CLIP)
STEPHANOPOULOS: Nothing they would have done differently, George Will, but the president is starting to face some calls now, as he comes back, that he should be doing something different, that he should scale back.
He writes in The Washington Post this morning. "No way. I'm going forward."
WILL: And that he should have what they're calling a second stimulus, which proves that those in charge of our money cannot count to three.
Because we had a stimulus 17 months ago, the George W. Bush/Nancy Pelosi $168 billion, was it?
STEPHANOPOULOS: Tax cut.
WILL: Tax cut and all that stuff, spur to the economy; unemployment then was 4.8 percent. Then six months ago, we had a stimulus. Now they want another one, proving the wisdom of Mitch McConnell's favorite saying, that there is no education in the second kick of a mule.
ROBERTS: You know, Joe -- Joe Biden, of course, was just speaking vicious truths, which he's want to do, which is that they did misread the economy, and...
STEPHANOPOULOS: He says everybody did.
ROBERTS: Well, but it is also true that a lot of people have been saying all along that unemployment would get to 10 percent. And all of a sudden, this 9.5 percent number has everyone saying, oh, my goodness, this is terrible; we've got to do something else. And there is no sense of, sort of, waiting and seeing what happens with this stimulus package that has been done.
DONALDSON: You know, we could be penny-wise and pound-foolish and say, well, we're not out of it yet, so let's not spend any more money. And that would be disastrous.
The mistake of the big Great Depression was not that Roosevelt did all these things but he didn't do enough. I think we're going to need a second stimulus.
I'm sorry that Rahm Emanuel, on your program a while back...
DONALDSON: OK -- sort of, tried to close the door to it, and they said that it wouldn't be over 8 percent, 9 percent unemployment.
I think we'll need a second stimulus. I think, if we don't spend, we're not going to get out.
STEPHANOPOULOS: The problem is, Bob Woodward, that -- there are a couple problems. Even if it's economically necessary; even if you need to prime the pump a little bit more, it's politically impossible, right now, and you're running up against record-high deficits?
WILL: And George has got a point. I mean, what does the stimulus really do? It doesn't change the economic fundamentals. And that's what Obama is going to have to do.
Look, the -- millions of people have lost their jobs. At some point, they have to have the expectation they're going to get those jobs back.
STEPHANOPOULOS: But wouldn't it have been worse for a lot of those people if they didn't have these stimulus funds that...
WOODWARD: It may be, but I don't think you -- if you really get the economists, here, on sodium pentothal, truth serum...
I don't know that you could do that, but if you did, they would say, you can't tinker around the margins, and that's what a stimulus is. You have to address fundamentals.
ROBERTS: And the president claims that that's what he's going to do this week.
Some of the other programs are addressing the fundamentals, but, you know, this is a big issue out there with people, particularly those who are feeling the pain and those who have lost their jobs.
DONALDSON: But the last stimulus spent a lot of money but didn't target it on creating jobs. You're quite right. There are -- some of these great programs that we all would like are not really helping. The next stimulus must target jobs. And we must get the assets off -- the toxic assets off the books.
WOODWARD: Or people who are losing their houses. I mean, this is a big...
STEPHANOPOULOS: And that program has...
WOODWARD: There's a lot of pain out there. Yes.
BRAZILE: But the economic guru, Warren Buffett, said that the second stimulus was like taking Viagra with a bunch of candy.
STEPHANOPOULOS: The first one was.
BRAZILE: Well, but anyone who knows anything about Viagra understands that it takes some time for it to work itself in the bloodstream and work its magic.
DONALDSON: I have no comment on that, but does candy work?
BRAZILE: Well, you know, we all know candy is much quicker than Viagra, but that's another conversation between you and I.
DONALDSON: "Candy is dandy, but liquor is quicker." Remember Ogden Nash?
BRAZILE: But -- but, so far, $200 billion has been spent. And there's another $600 billion that's somewhere in the pipeline. This was not meant to be a four-month program, but, rather, a two-year program, the first part to help rescue the economy in a free fall. And now, this next part is meant for a recovery.
ROBERTS: But there is no political will for other stimulus.
STEPHANOPOULOS: There's no question about that.
ROBERTS: So it seems to me...
STEPHANOPOULOS: Not right now. It could change.
ROBERTS: But, I mean, it seems to me what they need to do is just make sure that unemployment compensation is extended for the people who are out of work.
And apparently, according to the president's own op-ed this morning, he plans to come out this week and talk about long-term fixes like making our education system better, the community college system better, all of that.
ROBERTS: And, of course, that is something that will make a difference in the long run. But that is a very long run.
STEPHANOPOULOS: He also says health care is part of that, but we heard Senator Kyl say that's a job-killer.
WILL: Well, we don't know. And I'm not sure we're going to know. Because they're $1 trillion short on how to pay for that.
But, Donna, more of today's stimulus money will be spent in 2011 than in 2009. Why is that?
Well, defenders of the Obama administration say, and they're right, government's terrible at this. It takes so long. And there's so many requirements and so many set-asides and so many environmental impacts statements, it just can't act quickly.
Well, good. Now that we have -- we're all on the same page that government is not very nimble or efficient at this, should we really go on and expand the government?
DONALDSON: Well, George...
WILL: One more thing, Sam.
Bob says, what is the stimulus accomplishing?
I rise in defense of the stimulus because it's accomplished one thing. And that is it's sent so much money to state and local governments to prevent unionized public employees, which are the base of your party, Donna, from suffering the same kind of sacrifices that private-sector employees...
STEPHANOPOULOS: So it is saving jobs...
BRAZILE: You would rather see 14,000 school teachers in New York laid off, 14,000 schoolrooms that go closed in order to give back -- no, this -- this money has been used to not just create and save jobs at the state and local levels, but also to help states cover their budget shortfall, in terms of Medicaid spending, which has been increasing.
ROBERTS: Right. I mean, that's why Mark Sanford was in trouble in South Carolina his...
ROBERTS: ... before his peccadillos became public, because of rejecting the stimulus, because of school teachers. It was all about school teachers. DONALDSON: But if government is terrible about this, your answer seems to be, let's just stop. Let's give up, in a sense; let the marketplace work, eventually. And that's unacceptable.
DONALDSON: But I do agree, to take your point. Getting the toxic assets off the bank books so they will lend, -- we have not been able to do that. The program about private money coming in with government money has not gotten off the ground.
STEPHANOPOULOS: Because a lot of the banks don't want to participate.
DONALDSON: Let's go back to the RTC, the Resolution Trust Corporation idea that we used in the Savings and Loans debacle. Let's get that back. Let's get those assets off the books. Yes, we'll take a beating, the taxpayers, but we will take a beating worse if we don't get the banks (inaudible) lending.
STEPHANOPOULOS: Let me -- one of the building blocks of this long-term reform that Cokie says the president was writing about this morning is also health care reform. He wrote a lot about health care reform.
It did seem to bog down in the Senate this week. And now we had, as we talked about with the senators earlier, the House is going to come forward with this $550 billion tax increase to pay for it. Democrats in the Senate can't figure out yet how to pay for it.
How much trouble is the president's plan in right now?
BRAZILE: Well, the president, tomorrow, I believe, will be meeting with all of the key players in the House, the Democrats, especially, to make sure that they're all on the same page.
The proposal that was presented by the House Ways and Means Committee, the $550 billion in additional revenues -- there's no consensus on that. There's no consensus, right now, how to pay for it. But there is consensus that the Democrats will move forward and get this done.
STEPHANOPOULOS: Here's my question. You know the old saying from the '90s, "BTU," the Clinton economic plan -- the House members had to vote for this BTU, this energy tax, and then it died in the Senate; they were angry about it.
It seems like the House could be going down that same road again, put their members on the line for a pretty big tax increase that's not going anywhere in the Senate.
ROBERTS: Not just put them on the line, but also have the House pass a bill before they go out for August; have the Senate pass nothing, which seems to be the case... STEPHANOPOULOS: So you agree with Senator Kyl; you don't think it's going to happen in the Senate?
ROBERTS: I don't think it will happen in the Senate before the August recess. And then that House bill will be out there for everybody to take shots at.
And it's not just tax increases; it's also -- when people start to look at what's actually in that bill, you're going to have a lot of problems.
ROBERTS: You're talking about government mandates for everybody to have health insurance. And for a family of four making $27,000 a year, that's going to cost them $3,000 a year, and they're not going to like that.
WOODWARD: You run into the first rule of economics, and that is, if you add more people, 40 million people, to the health care system, that you're going to cover, it's going to cost more.
And you know, back in the Clinton administration, they ran into this reality. It wasn't because Hillary was secretive or it was her plan. They looked at the numbers and they said, my God, when you're running for re-election, you're spending more money rather than less.
STEPHANOPOULOS: That's true in the short term. The long term argument, Sam, is that, by having it -- bringing these people into the system, combined with some kind of a public health care insurance option, you're going to get more efficient; you're going to control costs?
DONALDSON: I agree with the president. Without a public option, the insurance companies would have rolled us once again. And they can do what they want.
Cokie, if it doesn't happen before the August recess in the Senate, I don't think it's going to happen. And that's why I think the president now, who's put his prestige behind this initiative, has got to throw in everything he's got this month and in early August.
DONALDSON: He doesn't have to be a dictator, but he has got to say to his party, I want this, this, and this.
STEPHANOPOULOS: No more hands-off?
DONALDSON: And they have to do it with 51 votes on reconciliation. They have to do it that way, or it's not going to be done.
BRAZILE: And the cost of doing that can be a high price because not only are more people going to be uninsured, but the premiums continue to rise at a rate that most American families cannot afford to even stay healthy and buy into their own health insurance. So I think Congress will get something done. But I agree with Sam, it may be 51 votes and not a bipartisan compromise.
STEPHANOPOULOS: The problem with that reconciliation argument, you talked to other Democrats, like Kent Conrad, the senator from North Dakota, they say this reconciliation crisis wasn't designed for major policy reform like health care.
DONALDSON: It wasn't.
STEPHANOPOULOS: And you really can't get the policy changes you that need through that bill, you'd have to pass two different bills and that's also difficult.
George, let me bring you in on these investigations. This headline this morning in "The New York Times" about Vice President Cheney ordering the CIA not to tell Congress about the secret program begun in 2001. We don't really know what the program was, some kind of a counterterrorism program but we know it never got it off the ground.
WILL: Here's what Bob Woodward's "Washington Post" says about the program. It quotes a former senior intelligence official, speaking on the condition of anonymity says "the program remains hardly secretive." He said "the program remained in the planning stages and never crossed the agency's threshold for reporting to the administration and congressional overseers."
But furthermore, the law, to which Cokie referred, 1947, establishing the CIA says indeed Congress must be kept informed unless -- and there's a huge asterisk. It says unless, "to the extent consistent with due regard for the protection from unauthorized disclosure of classified information relating to sensitive intelligence sources."
WOODWARD: I can't tell you how shocked I am, the idea that the CIA would withhold disclosing something.
STEPHANOPOULOS: On direct orders of the vice president?
WOODWARD: Well, it had to be on the authority of Bush. I mean, the vice president, powerful as he was, was not the president. And they would not do it unless Bush backed them up on this. The question here is, how do you keep secrets? You know, if you look at the news, this, and Eric Holder is going to have an investigation of interrogations now.
STEPHANOPOULOS: A very narrow prosecution in the investigation.
WOODWARD: Well, still, you know, so much of what we are talking about and living through now is the overhang from 9/11. It just doesn't go away.
STEPHANOPOULOS: The irony here, Sam, is that President Obama is threatening to veto the intelligence authorization bill because the Democrats in the House want to expand the number of people who are briefed. And the president is saying, nope, I don't want to go down that road.
DONALDSON: Once again, candidate Obama has met President Obama and has discovered maybe he needs to do different things. I think the key here is the words "planning." What does planning mean? A bunch of people sitting around, blue skies, let's have this study. You're right, I guess under the law, that doesn't need to be reported.
But was there ever any execution? Let's have a pilot program in the field and try this. On real people. Needs to be reported. And if they didn't do that, they need to be brought to task. They need to be brought to justice.
ROBERTS: What's so interesting is that it was people in the CIA who apparently brought this to the attention of the CIA director, Leon Panetta, because obviously, they wanted that out of there.
STEPHANOPOULOS: From the minute he heard about it, he shut it down.
ROBERTS: And went to Congress.
BRAZILE: So why don't we just put it all out on the table? There's already investigations. Many of them will be revealed this summer. So there's no reason why the attorney general should not have a special prosecutor.
DONALDSON: The president doesn't want to do that.
BRAZILE: Well, you know, the attorney general is a little bit independent of the president.
WOODWARD: After all those independent counsels that Janet Reno when she was attorney general appointed and Clinton would go purple each time.
STEPHANOPOULOS: And there has been some tension there between the attorney general and the White House. But based on my reporting overnight, George, the way this has been described, one, no final decision is made yet. Number two, it's not going to be a broad investigation. Not going to be an investigation of policymakers like Secretary Rumsfeld or Vice President Cheney. Not going to be an investigation of anyone who followed the instructions they were given. This is designed to go after rogue interrogators who just weren't following the guidance they were given.
ROBERTS: How do you even find those people?
STEPHANOPOULOS: The CIA inspector general report has already got a lot of the specific charges.
WILL: beyond that, is this going to be independent counsel? Because independent counsels have to be independent. Look at the example of Ken Starr. Ken Starr did not want to go all the places he went, but he was drawn by the logic of his unfolding investigation. And if they think they can control the parameters of this, they are very much mistaken.
WOODWARD: Whether it's an independent counsel or whether it's just a prosecutor within the -- there's a momentum that gets going and these things tend to unravel.
DONALDSON: You're shocked that the CIA keeps secrets. I'm shocked that Vice President Cheney would, you know, give orders, if in fact, he did. It's unlikely.
ROBERTS: I must say, I have very mixed minds about this. Because on the one hand, the whole idea of a prosecution gets Washington into that kind of horrible slog where everybody hates each other and the poison just gets very thick.
DONALDSON: Unlike at the moment, right?
ROBERTS: Well, no, it hasn't been as bad lately as it was in the last 16 years.
STEPHANOPOULOS: And it seems like they're trying to avoid at least in the design of this, criminalizing of policy.
ROBERTS: And just the whole atmosphere of getting that way again. On the other hand, the rule of law is terribly important. And we have to have it -- you know, we cannot operate in this country without the rule of law.
DONALDSON: So which hand do you come down on?
ROBERTS: I'd probably come down on the rule of law.
WOODWARD: OK. And that's where Panetta landed by going to the Congress and saying, look, this was not disclosed. The element in this that's very important is he stopped it. He said we're not going further. I don't think it was particularly sinister. I also think, you're exactly right, Sam, that candidate Obama has met President Obama and he says I don't want wide disclosure of our secrets because we need them.
WILL: and here's why. When someone went to Panetta in the CIA and told him about this and Panetta went to the Congressional Committee, what then happened? It leaked.
WOODWARD: Actually, they wrote letters publicly and the letters circulated.
STEPHANOPOULOS: Part of the reason they wrote those letters was in defense of the speaker, Nancy Pelosi who had said --
DONALDSON: Do you know what the program we're talking about? I don't.
STEPHANOPOULOS: Not what the problem is, but they had said they had been misled and the speaker has said the CIA has lied to us on many occasions. I think she said they lie all the time. So this is a measure of vindication, I suppose, for the speaker, even though she doesn't want to claim it.
Well, we've all been discussing these things all week. The country's been pretty absorbed by Michael Jackson, no question that it is -- I see Sam laughing over there, but it's also creating a real debate over whether we've gone too far. And at the memorial service on Tuesday, Congresswoman Sheila Jackson Lee getting up before the crowd at the memorial service and saying she was going to introduce a resolution, House Resolution 600, to honor Michael Jackson.
(BEGIN VIDEO CLIP)
REP. SHEILA JACKSON LEE (D), TEXAS: That claims Michael Jackson as an American legend and musical icon, a world humanitarian, someone who will be honored forever.
REP. PETER KING (R), NEW YORK: He was a child molester, he was a pedophile, to be giving this much coverage to him day in and day out, what does it say about us as a country?
(END VIDEO CLIP)
STEPHANOPOULOS: What does it say, George Will?
WILL: I don't know. The mainstream media is preoccupied with this, it's probably doing on margin less damage than it does when it's dealing with public policy.
WOODWARD: Thanks a lot.
WILL: Synthetic grief is a growth industry in the world today. We saw this with the Princess Di thing. People who didn't know her, hadn't thought about her for 10 years, suddenly dissolved in tears. I don't understand it. STEPHANOPOULOS: That's the part I wonder about. George called it synthetic grief, Donna. But for a lot of people out there, it did seem fairly real, yet this is a person he never met.
BRAZILE: You know, Michael Jackson was, for members of my generation, he was not just the King of Pop, but he was someone who was able to allow his music to go beyond just the black community. It really helped to define a generation, not just his music, but his dance, his celebrity itself. So this was a real outpouring of grief. This was nothing synthetic. Part of my own childhood died when Michael Jackson was announced dead.
STEPHANOPOULOS: Greatest entertainer of all time?
BRAZILE: I believe so.
WILL: Elvis died but the country didn't go berserk.
BRAZILE: Oh, we celebrated. He was also the king.
DONALDSON: Here's the different. I understand what you're saying, some people say that Michael Jackson was a freak. I don't like the word. But the point is, this time, unlike the Elvis time, many of you, not you, of course, who loved him, want us to love him, too.
Well, do we have to love him? In other words, the coverage seemed to say, at his funeral, apparently, the tickets weren't there. A lot of empty seats. Listening to the commentary, you would think that this was terrible, there had been a crime committed, there had been empty seats there. Hey, like him or don't like him, but don't make the people who didn't like him --
BRAZILE: I'm along with my iPod so that I can bring you up to date with some of this music and then I'll teach you a couple steps.
DONALDSON: What happened to Mitch Miller?
BRAZILE: Who's Mitch Miller?
WOODWARD: What's the lesson in his life and unfortunately, the lesson is the failure of success. Phenomenal success, all of the things that you're talking about are real, but there is the dark side in this that he is --
ROBERTS: Come on. The real lesson is everyone's making money off of this. Come on, the ratings are high. People are watching. All the news business is in trouble financially, and here's a story that people are actually interested in and paying attention to. I don't think it's much more complicated about that.
WOODWARD: Not all people. It's about rise and fall. And there is a fall here. And I think somebody who is in that entertainment world, show business world, I did a book on John Belushi who died of a drug overdose very early in his life. And that, too, is the story of failure and success. DONALDSON: All the Jackson men?
STEPHANOPOULOS: I'll tell you one thing, Speaker Pelosi didn't want to grab onto that resolution.
ROBERTS: No, that resolution was not happening.
STEPHANOPOULOS: No way that is going to have a vote in the House of Representatives.
BRAZILE: But they gave him a moment of silence and that was a fitting tribute to a king.
STEPHANOPOULOS: And that's where we have to end it right now. This is going to continue in the green room.