Transcript: Axelrod

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.

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