Transcript: Axelrod

And substantively, it's very bad for the country. It has long-term effects to have that much -- that many people in the country unemployed over the long term. And you've got a problem where a lot of employers have people on short hours, so they're going to put those people on full-time before they take on new employees, so they've got to do something.

NOONAN: It almost looks like to me, hitting 10,000 this week, as if New York or Wall Street has its own reality based on its own forecasts and America has a wholly different reality. It seemed to me there was a greater detachment between the country and -- and Wall Street this week.

We can all guess about what's behind the 10,000, but it could not be more serious that unemployment is expected by everybody, not just at this -- on this table, but everybody, to either stay high or go up. That would give everybody in the America the jits (ph).

But beyond that, I think the biggest thing giving everybody the jits (ph) and a sense of uncertainty and a sense that they don't want to hire or expand is this sense of debts and deficits, this sense that their country -- people understand the moment their nation is in. They have a sense of a trajectory, and they're not happy about it.

STEPHANOPOULOS: But that's what creates the dilemma. That is precisely what -- I -- I couldn't agree with you more on the politics of that. I think the country is very angry about it. Yet when you look at the economics, not only Paul Krugman, but, you know, Fed Chairman Ben Bernanke say the biggest mistake people made during the Depression was to worry about the deficits too singularly.

KRUGMAN: Let me say something. There's -- there's something that -- there was, I think, a little bit of bad reporting. When we got that $1.4 trillion deficit number, that was terrible, but it was actually $400 billion below what people were forecasting just a few months ago. The deficits are actually -- the surprises on the deficit are actually...


KRUGMAN: ... on the downside.

STEPHANOPOULOS: ... world-record deficit.


KRUGMAN: I know. I know, but the fact of the matter is that...

NOONAN: Three times bigger than ever.

KRUGMAN: ... that -- that if we were sort of, you know, dealing with, relaxed with the prospect of a $1.8 trillion deficit a few months ago, we should not be panicking, pulling back on stimulus, pulling back on support for the economy, when the actual deficit comes in $400 billion less than you were thinking it was.

STEPHANOPOULOS: And, Jake, do you agree the White House is not going to be cowed by this, that they are prepared to put much more on the table in stimulus?

TAPPER: Yes, they're talking about tax credits for job creation. But they have a problem coming up at the end of the month, the state job numbers created from the stimulus package, the $143 billion that's been spent. Those actual numbers, auditable jobs, those numbers will come out, and they will be much less than the 1 million jobs the administration says have been created. Of course, they're using -- using different ways of calculating this.


TAPPER: No, I know. But I'm just saying, perception-wise, the administration's talking about jobs directly created and indirectly created, you know, the people that make the -- the pavement that the workers who are directly paid by the stimulus pave with, et cetera, the people who give them sandwiches.

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