Transcript: Axelrod

Oct. 18, 2009 — -- ABC NEWS, THIS WEEK WITH GEORGE STEPHANOPOULOS INTERVIEW WITH WHITE HOUSE SENIOR ADVISER DAVID AXELROD.

SPEAKERS: GEORGE STEPHANOPOULOS, HOST: ABC'S "THIS WEEK WITH GEORGE STEPHANOPOULOS" OCTOBER 18, 2009

SPEAKERS: GEORGE STEPHANOPOULOS, HOST DAVID AXELROD, SENIOR ADVISER TO THE PRESIDENT GEORGE WILL, ABC NEWS PAUL KRUGMAN, NEW YORK TIMES E.J. DIONNE, WASHINGTON POST PEGGY NOONAN, WALL STREET JOURNAL JAKE TAPPER, ABC NEWS.

STEPHANOPOULOS (voice-over): Good morning, and welcome to "This Week." Wall Street is back, but what about Main Street?

(UNKNOWN): I was collecting unemployment, but unemployment just wasn't enough.

(UNKNOWN): We have millions and millions of people being kicked out of their homes.

STEPHANOPOULOS: The first Republican vote for health care.

SEN. OLYMPIA J. SNOWE, R-MAINE: When history calls, history calls.

STEPHANOPOULOS: But can Democrats bridge their differences?

SEN. CHARLES E. SCHUMER, D-N.Y.: We must have a public option.

SEN. JOHN D. ROCKEFELLER IV, D-W.VA.: Leaving 16 million men and women and children uninsured is wrong.

STEPHANOPOULOS: This morning...

PRESIDENT BARACK OBAMA: I'm just getting started.

(APPLAUSE) I don't quit.

STEPHANOPOULOS: ... critical questions at a crucial moment for the president. (UNKNOWN): Why do people hate you? And...

(UNKNOWN): Why are we still being nickel-and-dimed?

STEPHANOPOULOS: Our exclusive headliner, Obama's right-hand man, senior White House adviser David Axelrod.

Plus, our expanded powerhouse roundtable, with George Will, Nobel Prize economist Paul Krugman, Peggy Noonan of the Wall Street Journal, E.J. Dionne of the Washington Post, and ABC's chief White House correspondent Jake Tapper.

And, as always, the Sunday funnies.

JEY LENO, TALK SHOW HOST: A new study shows that the phrase most often used by President Obama is "Let me be clear." The phrase he uses the least often? "Let me be specific."

(END VIDEO CLIP)

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: Challenges just keep coming at President Obama, which gives us plenty to talk about with the man by Obama's side to deal with all the incoming, White House senior adviser David Axelrod.

Welcome back.

AXELROD: Thanks, George. Good to be here.

STEPHANOPOULOS: There -- there is so much to talk about, but it's all against the backdrop of a debate that's kind of swirling through the political world right now, crystallized by the National Journal magazine. We're going to show the cover of it right there, big picture of President Obama, the question, "Is He Tough Enough?"

Inside, they quote the historian Douglas Brinkley, who says, "Obama has created an atmosphere of no fear." And a Senate Democratic aide, "Obama's style has to be more Lyndon Johnson, half I love you, but I'll stick this screwdriver right through your heart in a second if it is to my advantage."

Is that what the president needs to do? Is it time for him to get tough?

AXELROD: Well, look, George, I think, if the president weren't tough, we wouldn't be where we are vis-a-vis trying to deal with the economy, two wars, and some -- remember what he inherited here. He walked in the door, we had the worst economy since the Great Depression. He had to take immediate steps to pull us back from what many thought might be a Great Depression. He had to sort out in Afghanistan a war where we had seven years of drift and no policy. And he passed a series of things that are going to move this country forward, from children's health care to pay equity for women, a series of things.

This Congress has passed more legislation in the first term of this president than any president in our lifetime. So I think he has been plenty tough. I think people want toughness, but they also want to have thoughtful leadership. And that -- and that requires reviewing these issues, thinking them through clearly, and bringing people along, and that's what he's doing.

STEPHANOPOULOS: So -- so you reject this argument that he has to draw more lines in the sand, twist the arms of his opponents, now tell people want he wants and expect it to get it done?

AXELROD: Let's take the issue of health care, because that's, obviously, one of the things that people are referring to. We are farther along than we've ever been in passing a comprehensive health insurance reform in this country. It's something we've discussed for 100 years.

George, you were part of the last effort in 1994, never even got a vote. We are on the doorstep of getting that done, and that's because of the approach this president has taken.

STEPHANOPOULOS: And yesterday, the president in his radio address took on the insurance industry, at least rhetorically, and he suggested that he might be willing to take away their antitrust exemption. Was he actually saying -- this has been -- the insurance industry for the last 60 years has had an antitrust exemption. Was he saying that he would sign a bill that would take that away and open the door to premium caps by the Congress?

AXELROD: Well, Congress is -- is reviewing that. He said it's appropriate that they review that.

STEPHANOPOULOS: Would he sign it, though?

AXELROD: But let's talk about -- let's talk about the insurance industry for a second, because most of the stakeholders in this health care debate are at the table, they're trying to produce real reform, because everyone knows the current system is unsustainable.

The insurance industry has decided now at the 11th hour that they don't want to go along with this. One of the problems we have is we have a health care system now that functions very well for the insurance industry but not well for the customers.

STEPHANOPOULOS: So is he saying, if they don't play ball, they're going to lose their antitrust exemption?

AXELROD: So what we need -- what we -- so we need these -- we need these reforms. In the last year -- in the last 10 years, premiums have doubled. You've seen the insurance companies take -- they -- they -- 10 years ago, 15 years ago, they spent 95 percent of their premiums on health care. Now, 80 percent. More of the money is going to bonuses, salaries, administrative costs.

This is -- this is not a sustainable path for this country. So we need reform, and that's what he is arguing for.

STEPHANOPOULOS: But if they don't join the reform effort, will they lose their antitrust exemption?

AXELROD: Well, we'll see what Congress -- we'll see what Congress does. One thing we ought to do, the House bill has in it provisions that -- that says that if they fall below a certain level of return of these medical loss ratios -- in other words, the amount of money that they spend on actual health care, that they -- they need to rebate some of that money to consumers. That seems like a good idea.

STEPHANOPOULOS: But the president wants to throw out this idea of taking away the antitrust exemption, but not willing to say today that he would sign it if Congress passes it?

AXELROD: Well, let's see how that -- let's see how that -- that goes.

STEPHANOPOULOS: Let's go on to something else. You also saw in advance in this week in the Senate Finance Committee Olympia Snowe, the first Republican to vote for the legislation, and that -- that created some -- I wouldn't call it a backlash, but some grumbling among some Democrats, including Congressman Raul Grijalva in the House. (BEGIN VIDEO CLIP)

REP. RAUL M. GRIJALVA, D-ARIZ.: I think it is a waste of time for the White House and to some extent for leadership to continue to cater to one vote.

(UNKNOWN): We can't sort of hedge and say, "What's Olympia going to do?" We've got to decide what we want.

(END VIDEO CLIP)

STEPHANOPOULOS: They're saying, particularly on this question of the public health insurance option, the president should listen to the majority of Democrats who want a public option, not this single Republican vote who doesn't.

AXELROD: Look, the president has very consistently and clearly articulated his support for a public option. He thinks that having competition within the health care system is healthy. There are some markets where one insurance company can dominate 90 percent of the market. We see that in some states. So he supports that.

But -- but that doesn't mean that we -- we halt the process. There are people in the Senate -- Republicans and Democrats -- who have objections to that. We have to work through these issues, and we're going to do that. The important thing is to create... STEPHANOPOULOS: But someone is going to have to blink, aren't they?

AXELROD: The important thing is to create a situation for consumers in which they have choice, there's competition, they get the best deal, and that's what we're after.

STEPHANOPOULOS: Who's going to win this fight, the House Democrats or Olympia Snowe?

AXELROD: Well, we'll see. I think that we -- here's what I believe, George. I believe that there is a fundamental belief on the Hill at this time that we can't fail now, that we've come this far, the country wants us to act, this is a problem that we've -- that's lingered for too long, and we're going to solve it.

And I think that will will overcome these differences. There will be compromise. There will be legislation, and it will achieve our -- our goals, helping people who have insurance get more security, more accountability for the insurance industry, helping people who don't have insurance get insurance they can afford, and lowering the overall cost of the system.

STEPHANOPOULOS: But you can't say today that the final bill that the president will sign must include a public option, as called for by House Democrats?

AXELROD: I think the final bill will achieve those goals, and a public option would help in that regard.

STEPHANOPOULOS: Let me also get at the question of how to pay for all this, because that is one of the -- the toughest issues to solve here. And the Senate Finance bill got about $200 billion from this excise tax on -- on -- on high-priced health insurance plans, but a coalition of organized labor and about 178 House Democrats have said this is going to be a middle-class tax increase on people who have insurance.

Here's what the -- the unions wrote. They said that 40 percent -- the enormous tax would soon hit 40 percent of all plans. Mostly likely to be hit: plans with people who are older or sicker or those who work for small employers. That's not the change America voted for. A new tax on the middle class is unacceptable.

Does the president agree with those unions who say that this excise tax is a middle-class tax increase?

AXELROD: Well, the analyses of this have suggested otherwise, that the bulk of it is not going to hit middle-class people. Because in his -- in his -- in his...

(CROSSTALK) STEPHANOPOULOS: ... percent.

AXELROD: In his campaign, as you know, he opposed John McCain's proposal to completely eliminate the -- the tax exemption on -- on health care benefits. And he still believes that. But this -- this is a tax on insurance companies, a fee on insurance companies on high- end policies. Everyone agrees that it'll help lower the growth in health care costs, and it will help contribute to the reform we need.

STEPHANOPOULOS: But the...

(CROSSTALK) AXELROD: But having said that, George, the president has -- we're going through a process. The House has its proposals. The Senate has its proposals. We will pass bills in both -- in both chambers. We'll go to a conference, and we'll hammer these issues out.

STEPHANOPOULOS: Let me -- let me just press this one more time, because it was -- this was not just any analysis. This was the Joint Committee on Taxation. This is a bipartisan, bicameral body in the -- in the House and the Senate, and they say that this is going to hit 40 percent of all plans. That is going to reach in to the middle class. If it does, would the president sign it?

AXELROD: Well, let's see what -- I think that this thing is going to be adjusted as we go along, so let's see what the final proposal says before we talk about what the president will or won't sign. The president is going to sign a bill that will provide greater security for people who have insurance, that will help people who don't have it get it, and will lower the overall cost of health care. And if it doesn't meet those standards, then he won't sign the bill.

STEPHANOPOULOS: The president has drawn one other very red line in the sand, that he won't sign any health care bill that increases the deficit.

(BEGIN VIDEO CLIP) OBAMA: I will not sign a plan that adds one dime to our deficits, either now or in the future. (APPLAUSE)

I will not sign it if it adds one dime to the deficit now or in the future, period. (END VIDEO CLIP)

STEPHANOPOULOS: Yet just this week, the Senate majority leader, Harry Reid, is going to bring a bill to the floor that -- Republicans call this the first installment on health care, which is going to permanently repeal savings gotten from payments -- Medicare payments to doctors, $248 billion over 10 years. Must that be paid for, for the president to sign it?

AXELROD: George, first of all, understand that that -- when the Republicans say this is the first installment on health care, it's not part of the health care bill. This -- this has been -- there's been...

STEPHANOPOULOS: It was in the House bill.

AXELROD: Yes, but the point is that, every year, this -- this provision of the Medicare law goes into effect. Every year, draconian cuts are proposed for doctors that would have a deleterious effect on patients. And every year, the Congress acts on it and defers on that. And the fact is, it's a charade.

Everyone in the Congress knows they're not going to let that go forward. All that we're saying here is, let's be honest about it. The president provided for it in his budgets, and we ought to acknowledge that this is a -- this is an ongoing expense that we'll have to meet.

STEPHANOPOULOS: But isn't it actually -- isn't it also a charade if you're saying, "We're going to do this. We're not going to pay for this $248 billion," and that's the only way you can end up not increasing the deficit... (CROSSTALK)

AXELROD: Well, it will be -- it will be part of the budget. It will be paid for as we move -- as we move forward. The fundamental health reform, George, that we're talking about that would provide subsidies to people who can't afford health care today and ancillary expenses are all going to be paid for.

STEPHANOPOULOS: But will -- would this particular bill have to be paid for? Because the House -- Speaker Nancy Pelosi has said that she's not going to pass it through her chamber unless there are specific things... (CROSSTALK)

AXELROD: As I said, the president's provided for it in his -- in his budget, and we will account for it. STEPHANOPOULOS: Let me ask -- on this question of the deficit, another question about jobs. We saw a $1.4 trillion deficit announced on -- on Friday. And I know that you're not ready to say the president -- which proposals the president specifically is going to look at now to help create new jobs in the future, but just as a matter of principle, does the president believe right now that this problem of 9.8 percent unemployment has to take precedence in the short term over reducing the deficit? And so is he open to more job- creation measures?

AXELROD: Yes, look, we -- when we came to office, we were handed two problems. One was the $1.2 trillion deficit, and the other was the worst economic crisis since the Great Depression. We have to solve that economic crisis. We have to get the economy moving.

We've made some progress. There's an anticipation that there may be growth in the third quarter. We've slowed the -- the -- this catastrophic loss of jobs significantly. We have to turn that around. And that is a priority.

I think history shows us that the worst mistake you can make is to pull out of your -- your recovery efforts too early, because you could send the economy cascading backward into a recession, so that has to be a priority, but that doesn't mean that we don't look to the mid- and long term for deficit reduction.

The president is going to be addressing this at some length in the -- in the State of the Union... (CROSSTALK)

STEPHANOPOULOS: But the deficit may go up...

AXELROD: ... have to...

STEPHANOPOULOS: ... before it comes down, in order to create jobs.

AXELROD: Well, we need to account for the things we're doing. We have a stimulus program in place, an economic recovery program in place, that is not even 50 percent through. We have to see that through. And we'll see what other measures we need to take.

STEPHANOPOULOS: Let me also ask you a question about Wall Street. We saw Wall Street for about -- for a moment this week top 10,000 on the strength of some pretty stunning earnings out of big banks, like JPMorgan and Goldman Sachs. And we've also seen now that Goldman Sachs is likely to pay out more bonuses this year, $23 billion, than it did at the peak of the market, in 2007.

Here's what the president had to say about bonuses back in January. (BEGIN VIDEO CLIP)

OBAMA: There will time for them to make profits, and there will be time for them to get bonuses. Now's not that time. And that's a message that I intend to send directly to them. (END VIDEO CLIP)

STEPHANOPOULOS: So is it OK with the president now for banks like Goldman Sachs to pay the biggest bonuses ever?

AXELROD: Well, look, the bonuses are offensive. And to the -- for the firms that still have federal TARP money, there's some jurisdiction. The paymaster at Treasury is -- is working on that, to try and limit that. You've seen a lot of firms go to stock rather than cash, so at least people have a stake in the success of their company and they're not just walking away with cash, making short-term decisions that are bad for their institutions and the economy.

But here's the bigger thing, George. The most offensive thing is, we haven't seen the kind of increase in lending that -- that we should.

There are a lot of small businesses, creditworthy businesses around this country who still can't get the capital they need to grow, which is important for our economy, and you've seen these same institutions spend tens of millions of dollars lobbying the Congress to -- to try and -- and stop financial regulatory reform, to stop the kind of reforms that we need to prevent the disaster we just saw and to protect consumers. And that -- that is most offensive.

And the thing the president, his priority right now is to pass that financial regulatory reform, defeat the lobbyists for the banks...

STEPHANOPOULOS: But what does the president...

AXELROD: ... and do what's right for the country.

STEPHANOPOULOS: What does the president say to Goldman Sachs right now about those bonuses?

AXELROD: Well, they ought to have -- they ought to -- first of all, we have, as I said, limited sway other than moral suasion with some of these -- a lot of these institutions. STEPHANOPOULOS: They are getting an awful lot of money from the Fed.

AXELROD: They ought to -- they ought to -- they ought to think through what they're doing, and they ought to understand that, a year ago, a lot of these institutions were teetering on the brink. The United States government and taxpayers came to their defense.

They have responsibilities. They ought to meet those responsibilities. And they ought to express them by increasing lending, which is what we need right now, and by standing down and allowing the kinds of reforms we need to protect consumers and protect the country from the sort of disaster we've seen.

STEPHANOPOULOS: And rethink the bonuses?

AXELROD: Well, they should do that. I think that -- I think what they need to understand is, on the same day that you saw stories about these bonuses, you saw a story about how wages are at a 19-year low. The American people have limited -- limited tolerance for this. They want -- they don't begrudge success, and we ought not to be in the business of micromanaging how companies compensate their people. But they ought to do the things that they should to help this country, and that's lending, and that's -- and that's standing down on financial regulatory reform and letting -- letting us move forward on the reforms we need.

STEPHANOPOULOS: Final question. Your colleague, Anita Dunn, told the New York Times this week that Fox News was undertaking a war against the White House and said the White House would treat Fox the way we would an opponent. Here's what Rupert Murdoch had to say about that.

(BEGIN VIDEO CLIP)

RUPERT MURDOCH, NEWSCORP: There were some strong remarks coming out of the White House about one or two of the commentators on Fox News. And all I can tell you is it has tremendously increased their ratings.

(END VIDEO CLIP) STEPHANOPOULOS: That does seem to be true. Are you worried that your strategy is fortifying your enemy? AXELROD: Well, I don't -- you know, I'm not concerned. Mr. Murdoch has a -- has a talent for making money, and I understand that their programming is geared toward making money. All -- the only argument Anita was making is that they're not really a news station, if you watch -- even -- it's not just their commentators, but a lot of their news programming, it's really not news. It's pushing a point of view.

And the bigger thing is that other news organizations, like yours, ought not to treat them that way, and we're not going to treat them that way. We're going to appear on their shows. We're going to participate, but understanding that they represent a point of view.

STEPHANOPOULOS: OK. David Axelrod, thanks very much.

AXELROD: Good to be here.