Transcript: Health Care Debate

PHOTO Health care debate on "This Week" Nov. 22, 2009.

STEPHANOPOULOS (voice-over): Good morning, and welcome to "This Week."

(UNKNOWN): The motion is agreed to.

STEPHANOPOULOS: Sixty votes, and the debate begins.

(UNKNOWN): Doing nothing is not an option.

(UNKNOWN): These bills don't reform health care. What they do is grow government.

STEPHANOPOULOS: But are there 60 Senate votes to pass reform? Can there be agreement with the House?

SEN. JOHN MCCAIN, R-ARIZ.: Bernie Madoff went to jail for this kind of behavior.

SEN. CHARLES E. SCHUMER, D-N.Y.: I have no doubt we will pass this bill.

STEPHANOPOULOS: And are those controversial new cancer guidelines the future of health care?

(UNKNOWN): This is how rationing began.

WASSERMAN SCHULTZ: This is an independent task force. It's not the government.

STEPHANOPOULOS: Those questions this morning to four key players from the Senate and the House, our "This Week" debate.

Then, as the president tours Asia, Sarah Palin tours the country. That and the rest of the week's politics on our roundtable with George Will, Robert Reich of the American Prospect, Republican strategist Liz Cheney, and best-selling biographer Walter Isaacson of the Aspen Institute.

And, as always, the Sunday funnies.

DAVID LETTERMAN, TALK SHOW HOST: They're having a big Thanksgiving dinner at Sarah Palin's house, and people say, "Well, is she a good cook?" And I said, "Well, sure. She cooked John McCain's goose."

(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: Both sides called it historic, but while Republicans insisted that yesterday's vote to break a filibuster is the decisive vote on health reform, several Democrats said there was nothing final about it, simply a vote to begin the debate.

And let me begin our debate this morning by bringing in our panel. I am joined by Congresswoman Marsha Blackburn of Tennessee, Republican of Tennessee, Senator Tom Coburn, Republican of Oklahoma, Senator Ben Nelson, Democrat of Nebraska, and Congresswoman Debbie Wasserman Schultz, Democrat of Florida.

And, Senator Nelson, let me begin with you on this -- on this overall question. You heard Senator McConnell, several other Republicans yesterday saying this is the vote. And -- and a couple of weeks ago, you -- you seemed to agree. You were talking to our Jon Karl, and you said, if you couldn't live with the bill, then you wouldn't vote to let the debate begin. So that does mean that you can live with this bill?

NELSON: No. What I -- what I meant by that is that, if I thought the -- the vote -- the bill couldn't -- this was before I saw the bill, but I thought the bill couldn't be amended and couldn't be corrected and improved, then I wouldn't move -- vote to move it forward and move the debate. But when I saw the bill, I said, "This can be amended. It can be improved." And the -- the debate should begin, and ought not to stop the opportunity to improve the bill when it...

STEPHANOPOULOS: Just to be clear: If this bill -- if there were a vote to end the debate today, you would not vote to end the debate, to get this...

NELSON: I would have voted no. I would have voted no. I would have voted to end -- not to end debate. I would have voted no on a cloture vote to end debate.

STEPHANOPOULOS: So you wouldn't let it get off the floor?

NELSON: So I would not let it get off the floor. That's what that means at the -- that's the next round.

STEPHANOPOULOS: Senator Coburn, you also promised before the vote yesterday to read all 2,000 pages, yet you didn't do it. Is that a sign to you that just the handwriting is on the wall and you decided to fold?

COBURN: Well, it -- it didn't accomplish a purpose. What we're going to do is read the bill to the American public. I think when you'll be -- what you'll be seeing when we come back is us going through it section by section, explaining what it means. It was a symbolic gesture, but it -- it didn't work with what Senator Reid and Senator McConnell wanted to do. I understand that.

I don't think we lose anything in the debate. But the important thing is for the American people to understand that this bill doesn't fix what's wrong with health care. We're treating symptoms, not the disease, and it's really malpractice what we're doing.

The -- the -- the problem in America today with health care is it costs too much, George. And there's nothing to address that. And one out of every three dollars that Americans spend today doesn't help anybody get well and doesn't keep anybody from getting sick. So why would -- why would we not want to go and fix the problems in health care, not the symptoms that all the politicians play around with, but the real problems?

STEPHANOPOULOS: I want to get to the congresswoman, but, first, let me -- just answer that point. He says he doesn't do anything to control the costs.

NELSON: Well, you know, it doesn't do enough to control the costs; that's for sure. And we do need to address that cost containment. I'm very concerned about that. But I -- I certainly couldn't say it does nothing.

I think the effort on prevention, early detection, wellness, the workforce development for more primary care physicians, those will all be helpful in -- in reducing the costs of health care.

COBURN: And ask -- ask the question, George, why did -- do we have an imbalance in primary care physicians? Why is it there? Does anybody know? It's because we pay them 300 percent lower than we pay the sub-specialists. And so we don't do anything in that -- we're going to help pay for some of their education, but we paid -- we do nothing to change that balance. One in fifty doctors graduating last year decided to go into primary care. That's a disaster that has been caused by Medicare setting the prices.

STEPHANOPOULOS: So not enough for primary care, although, as you point out, there are more incentives for primary care education in this. But I want to bring the question to you, Congresswoman, is the -- the differences between the House and the Senate bills, some fairly significant differences over how to pay for the bill, over how abortion services are covered, on size, $1 trillion or so for the House bill, below $900 billion on the Senate bill, and, of course, on this public option.

So when you look at what the Senate is considering now, is that something you and the majority of Democrats in the House can go for?

WASSERMAN SCHULTZ: Well, what's important to focus on, George, is that there's far more that we have in common between the two bills than our differences. And while some of the differences are significant, all Democrats, whether it's a Senate Democrat or a House Democrat, are committed to health care reform and making sure that we can cover the people in America who are uninsured -- about 31 million or 36 million individuals are covered by both of these bills -- make sure we can provide security and stability to those who don't have health insurance, and that's really been -- that's been really underexamined.

We have, you know, about 85 percent of Americans who have coverage, and every year, whether you're a small-business owner or an individual, they have skyrocketing insurance premiums that this bill will get a handle on, both bills, and making sure that we can bring down and control costs.

And with all due respect, Senator Coburn, both of these bills will bring down costs and control costs and make sure that simply by getting rid of insurance companies' ability to -- to drop you or deny you coverage based on a pre-existing condition, creating insurance exchanges so that we can pool individuals and broaden the number of people that are covered and bring down the cost of their insurance, making sure that -- that folks have the ability to have their premiums set not based on gender, which causes women to have a 48 percent on average higher premium, but making sure that we have just a few items that are rated by insurance companies to bring down their costs.

STEPHANOPOULOS: You hear that case, yet not a single Republican in the House voted yes.

BLACKBURN: And with good reason.

STEPHANOPOULOS: Actually, I take that back. Congressman Cao from Louisiana...

(CROSSTALK)

STEPHANOPOULOS: ... one Republican.

BLACKBURN: And -- and -- and with good reason for not voting for it. We had a Republican alternative that actually would have brought down the cost of health insurance. CBO scored both plans. They said that our Republican alternative would have brought insurance costs per family $5,000 per year less, would have brought those costs down, and that is $5,000 less than the least expensive Democrat proposal. Now, we all agree...

(CROSSTALK)

BLACKBURN: ... there need to be reforms, that we all agree there need to be reforms in health care. But we know that putting this government-run health care that leads to a government takeover, it doesn't work. There is no test case out there that they can point to, no pilot project they can point to where a government-controlled health care system has brought down the cost, increased the access, taken care of those with pre-existing and chronic conditions, allowed portability, dealt with malpractice reform. Those are things we as Republicans are for, and unfortunately, their bill does not achieve what they are saying they want to achieve.

Look at what has happened when you look at the cost of Medicare. It has skyrocketed. What is it, 700 percent...

(CROSSTALK)

WASSERMAN SCHULTZ: It's important to know that what CBO also said, that their bill would only cover about 5 million, not even coming close to addressing the problem of the uninsured or the underinsured. It doesn't address requiring insurance companies, prohibiting insurance companies from dropping you or denying you coverage for pre-existing condition. It does -- it -- it allows for association health plans...

BLACKBURN: But what we did...

WASSERMAN SCHULTZ: Excuse me, Marsha. It allows for association health plans, which means that all the mandates, like for mammograms and making sure that women and people who need coverage in this country, all the mandates would be gone, and you'd go to the lowest common denominator.

BLACKBURN: Well...

WASSERMAN SCHULTZ: This is a bill that doesn't even come close to addressing...

(CROSSTALK)

BLACKBURN: That is incorrect.

WASSERMAN SCHULTZ: No, it is not incorrect. It's a bill that doesn't even come close to addressing...

(CROSSTALK)

BLACKBURN: ... what it does do is establish risk pools and reinsurance...

(CROSSTALK)

BLACKBURN: ... gets to near universal coverage.

(CROSSTALK)

STEPHANOPOULOS: ... because we heard something about some of the differences with -- with the House bill, and I want to press a little bit more on what your bottom lines are going forward. We heard your colleague, Senator Lincoln, say if the public health insurance option is included in the legislation, she will not vote to get it off the floor. Do you agree with that?

NELSON: It depends on what the public option is. I -- I am opposed to the public option of where the states have to opt out. I said I would look at a public option where states could opt in. But that -- that with the opted in, it wouldn't apply to every other state.

I -- I really think that state -- you can have state-based solutions in many instances where the states can step forward and take care of certain responsibilities, with some assistance from the federal government.

STEPHANOPOULOS: A second big issue, abortion funding. The -- the Senate bill is -- allows more public funding of abortions than the House bill -- than the restrictions under the House bill. If -- if that language remains, can you vote to get this off the floor?

NELSON: No. But I might not to get it off the floor because of other considerations, as well. Even if that -- even if that was perfected, where I could support that particular provision, if the public option is wrong, if the CLASS act is still in it, if -- if there are a whole host of other items that are the same as they are right now, I wouldn't vote to get it off the floor.

STEPHANOPOULOS: These are significant differences with -- with what the majority of Democrats in the House have called for. Can -- do you believe your colleagues will go along -- I know you -- you say there are basic areas of agreement -- but if on these key issues, Senator Nelson and his centrist colleagues win out, would this bill get through the House?

WASSERMAN SCHULTZ: But what Senator -- I don't want to speak for him -- but what Senator Nelson is not -- you don't hear him saying is that there isn't any room for negotiation or compromise.

STEPHANOPOULOS: On public option he said, but...

WASSERMAN SCHULTZ: Well, I...

NELSON: No, no. I mean, we could negotiate a public option of some sort that I might look at, but I don't want a big government, Washington-run operation that would undermine the -- the insurance that -- private insurance that 200 million Americans now have.

STEPHANOPOULOS: So Democrats are prepared to compromise again on the public option?

WASSERMAN SCHULTZ: We're going to sit down in the conference committee and make sure that we can hammer out the differences between the two Senate bills, which we have done in America since the founding fathers wrote the Constitution.

(CROSSTALK)

COBURN: ... three points. One, 61 percent of health care in this country is already run by the government. Name one that works well. That's number one.

STEPHANOPOULOS: Well, I think some would argue Medicare.

COBURN: No, it's highly inefficient, and it's going to be broke in three years. How can you say it's running well?

(CROSSTALK)

COBURN: Let me -- let me finish...

(CROSSTALK)

COBURN: Number two is, this -- this bill creates 70 new government agencies with thousands of new bureaucrats, with -- I'm talking about the Senate bill -- with 1,597 different instances where the secretary's mandated to write rules and regulations. If you think that isn't going to get between patients and their doctors, I have a whole lot of swamp land in Oklahoma I'd like to sell you.

The -- the third point that I would say is we can fix all these problems, but we have a government-centered approach that is already failing instead of a patient-centered approach. And we ought to be concerned about patients, not the government.

And -- and there's 11 studies out as of this morning that said both the House bill and the Senate bill will raise premiums, not lower them. There's -- that includes the Joint Tax Committee and the Congressional Budget Office, as well as nine other independent analyses.

So we -- do we all want to solve health care? Yes. Let's fix the real problem. Let's go after some of the $600 billion to $750 billion of waste that is not applied to truly preventing illness or treating illness...

(CROSSTALK)

STEPHANOPOULOS: ... I want to focus on one point that you raised, though. The Congressional Budget Office does say that, under this bill, premiums will go up.

WASSERMAN SCHULTZ: Well, there are different...

STEPHANOPOULOS: You're nodding your head, but...

WASSERMAN SCHULTZ: There -- there are differences of opinion as to whether or not the Congressional Budget analysis is correct on -- on the increase in premiums. But the important thing here is that I hope we can all agree that we have to get rid of the profit-driven, insurance company-driven health insurance system that we have, where it's insurance company bureaucrats, Senator Coburn, that are getting in between patients and their doctors.

To suggest that this bill will put government in between patients and their doctors is really disingenuous...

(CROSSTALK)

COBURN: ... private insurance denial rate is. Now, think about that. Medicare's denial rate on claims is twice -- it's 6.5 percent. The average insurance is 3.5 percent. I -- look, I've dealt with the insurance industry. I know how bad they can be. I don't want to eliminate them; I want to make them transparent and accountable.

(CROSSTALK)

WASSERMAN SCHULTZ: ... Republicans suggest that we should change Medicare...

(CROSSTALK)

STEPHANOPOULOS: I want to bring this back to...

(CROSSTALK)

WASSERMAN SCHULTZ: ... Republicans...

(CROSSTALK)

STEPHANOPOULOS: Excuse me for a second. I want to bring this back to another controversy we had this week over the cancer deadlines, because it connects to this point in the patient-doctor relationship. You and several others were critical...

BLACKBURN: Yes.

STEPHANOPOULOS: ... of the -- of the guidelines saying that this is -- that under the president's plan, under the Democrat's plan, it's going to lead to more rationing. Yet the American Cancer Society says that the Republican alternative is worse, would do more harm than good, wouldn't give preventive services to anyone, and that under these bills, preventive care is encouraged and actually required by insurance companies. So isn't that an improvement?

BLACKBURN: Well, actually, it is not. And the guidelines that came out this week by the Preventive Services Task Force have a direct link to what would be offered if the House and the Senate bills were to go into law, if they were to be put into law.

And, George, this is exactly how it happens. If you go to page 1,296 of the House bill, the engrossed copy, and you began to read in title three of that bill, on preventive and wellness services, and you get down to section 2301, this is what happens. In section 3131 of that bill, it changes the Preventive Services Task Force to the Clinical Preventive Services Task Force.

Then, you go back and you see that that task force on preventive clinical services is tasked with rating A, B, C, D, or I all preventive services. Then you go back into section 222 of the bill...

(CROSSTALK)

BLACKBURN: Yes, I have read this bill. And that indicates what would be paid or covered. And this is where the actual link comes, and I'll read it for you. In section 2301, it says, "All recommendations of the Preventive Services Task Force" -- that's the group that did the mammograms -- "and the Task Force on Community Preventive Services, as in existence on the day before the date of the enactment of this act, shall be considered to be recommendations of the Task Force on Clinical Preventive Services."

STEPHANOPOULOS: So the guidelines -- the point is that the guidelines then...

BLACKBURN: They becomes the law.

STEPHANOPOULOS: ... would -- would become...

BLACKBURN: They become the law, the mandate.

STEPHANOPOULOS: ... would become controlling.

WASSERMAN SCHULTZ: No, they would not be.

BLACKBURN: Yes, they do.

WASSERMAN SCHULTZ: And what's unfortunate is that the Republicans, and Ms. Blackburn, have for the first time politicized breast cancer.

BLACKBURN: That is incorrect.

WASSERMAN SCHULTZ: That is -- no, it is not. And I'm a breast cancer...

BLACKBURN: No, it is incorrect.

WASSERMAN SCHULTZ: As you know, as a breast cancer survivor, Marsha...

BLACKBURN: That is incorrect. It's in the bill, Debbie.

WASSERMAN SCHULTZ: Excuse me.

STEPHANOPOULOS: Let her finish her point.

BLACKBURN: I have a great respect -- yes.

WASSERMAN SCHULTZ: As a breast cancer survivor, I came out against these -- these recommendations. Every major cancer organization has come out against these recommendations. The task force language in that bill actually makes sure that prevention -- preventive services like mammograms and colonoscopies and other cancer screenings would be free. The task force recommendations -- the language in the bill...

(CROSSTALK)

STEPHANOPOULOS: Well, Debbie, let me -- let me clarify this...

(CROSSTALK)

WASSERMAN SCHULTZ: ... that even more women would get access to...

(CROSSTALK)

STEPHANOPOULOS: Excuse me for a second. That -- that is true. But let me clarify a little bit, because under the -- the bill -- and we have -- we have the language, as well. It says that a group health plan and health insurance issuer offering the group (ph) shall provide coverage, but only under -- if the Preventive Services Task Force rates it as an A or B.

BLACKBURN: That's right.

STEPHANOPOULOS: And, actually, under the -- under the task force, they said that these mammograms for women 40 to 50 is rated C. So they actually wouldn't be covered. So you have a great expansion for a broad part of the population, but actually, these guidelines would be controlling for ages 40 or 50.

(CROSSTALK)

WASSERMAN SCHULTZ: ... task force's recommendations are simply recommendations. They...

BLACKBURN: No.

WASSERMAN SCHULTZ: They aren't controlling.

COBURN: As a physician who's been...

(CROSSTALK)

WASSERMAN SCHULTZ: They aren't going to be -- they aren't going to be binding. They're recommendations.

STEPHANOPOULOS: Well, but the language here says they...

(CROSSTALK)

COBURN: Here's the question. Here's the question we ought to be asking. Do these recommendations make sense from a cost standpoint? Absolutely, from a cost standpoint, they're right. You look at the statistical analysis, they make sense.

From a patient standpoint, they're atrocious. And that's the problem with a bureaucracy stepping between a physician and their patient.

STEPHANOPOULOS: Can you weigh in on this?

NELSON: Well, absolutely. I -- I worry about a government-run plan that would be subject to recommendations that might be applied universally without respect to patients. I am concerned about that, not that you can't fix some of those concerns, but you can't fix every one of them, and I am concerned that if it's -- if it's turned over -- look, the insurance industry has its own challenges. And -- and many of those can be handled with transparency and by eliminating pre-existing conditions and rescissions and rating based on health and some of the other ratings -- gender ratings.

But -- but we're not going to -- if we can keep as much of it at the state level is as possible, you've got -- you've got patient's bill of rights, you've got all kinds of mandated coverages, and -- and this can be handled on a state-by-state basis. It gets lost in Washington in a big government-run plan, and I don't know what happens.

STEPHANOPOULOS: But if you don't have these kind of guidelines, how are you going to get the cost control you were talking about 10 minutes ago?

NELSON: Well, I don't mind guidelines and recommendations, but I don't want them to become the equivalent of rules and law.

WASSERMAN SCHULTZ: And we can't...

(CROSSTALK)

BLACKBURN: And it says "shall."

WASSERMAN SCHULTZ: We have to make sure that we're not forgetting about the people. And that's what the task force forgot about this week, is that we're not thinking about big, amorphous blobs of -- of people. Making -- these recommendations say that we can trade one life to save the angst and anxiety in a -- a larger group of women, and that's totally inappropriate, but that's also why major experts, medical experts, the cancer society, the colon foundation all came out against this, and that won't be...

BLACKBURN: Well, but still it's a mandate.

WASSERMAN SCHULTZ: ... controlling in the final legislation.

(CROSSTALK)

STEPHANOPOULOS: ... going to be changed?

WASSERMAN SCHULTZ: Actually, you know, I would invite you -- I would invite you...

(CROSSTALK)

BLACKBURN: Well, you know what? I think you and I need to work as -- together on a motion to instruct and get this language out of here, because on page 1,318, it does mandate it. It...

WASSERMAN SCHULTZ: Marsha, first, I would suggest...

BLACKBURN: ... says that the HHS secretary has to do this. So, you know...

WASSERMAN SCHULTZ: No, we have different interpretations, but...

BLACKBURN: ... Debbie is right when she says they forgot about people. Indeed, they did. But we have to realize, this group that made this recommendation, this isn't some outside group. This is a part of HHS. And when you look at the...

WASSERMAN SCHULTZ: It's an independent group. That is not accurate.

BLACKBURN: ... 118 -- when you look at the...

WASSERMAN SCHULTZ: It is not a part of HHS.

BLACKBURN: No, it is a part of HHS.

WASSERMAN SCHULTZ: No, it is not.

BLACKBURN: And when you look at what is going to happen with these 118 new bureaucracies with 62 directives that are given by the health choices commissioner on what insurance can be offered in this country after 2013 and what is going to be paid, you know that this is the bureaucrat in the exam room. This is how it's going to happen.

WASSERMAN SCHULTZ: Marsha...

BLACKBURN: And this is the first step.

WASSERMAN SCHULTZ: Marsha, there's an insurance company bureaucrat in the -- in between the patient and her doctor right now.

BLACKBURN: This is breast cancer. Well, and people don't like that, and we need to get rid of...

(CROSSTALK)

WASSERMAN SCHULTZ: And your bill -- your -- your alternative...

(CROSSTALK)

BLACKBURN: We need to get rid of all of those insurance bureaucrats.

WASSERMAN SCHULTZ: ... does nothing to...

(CROSSTALK)

STEPHANOPOULOS: I'm going to have to -- I'm going to have to stop this right now. And, Senator, before you go -- and I know this is your least favorite subject -- but Doug Hampton, Senator Ensign's chief of staff, has given an interview to "Nightline" which is going to air tomorrow night, where he says that you were an intermediary between him and Senator Ensign, and I want to show that for a second.

(BEGIN VIDEO CLIP)

HAMPTON: Tom Coburn said, "What I would do, Doug, if I was you is I would have them buy your home, give you $1 million bucks so you could get started over, and that's what I'm willing to help you negotiate."

(UNKNOWN): And what happened?

HAMPTON: John said, "No can do. Not going to happen."

(END VIDEO CLIP)

STEPHANOPOULOS: Is he telling the truth?

COBURN: No.

STEPHANOPOULOS: Flat no?

COBURN: No.

STEPHANOPOULOS: You did not serve as an intermediary?

COBURN: Oh, I did. No, there's no question. Look, my whole goal in this thing was to bring two families to a closure of a very painful episode. And there's no question that Doug called me and said, "Will you talk to John about solving a problem?" And so I called John Ensign and said, "Do you want me to talk to him?" He said, "Yes."

But, you know, the -- the question that's worrisome is, what is the motivation now for -- for this? Doug obviously asked to have some remuneration for the injury that he had. And on private sector, that happens all the time. But there -- there was no negotiation. There was, "I'll pass it along," or, "Yes, I won't."

STEPHANOPOULOS: Senator, thanks very much.

Thank you all very much.

BLACKBURN: Thank you.

NELSON: Thank you.

STEPHANOPOULOS: The roundtable is next with George Will, Robert Reich, Liz Cheney, and Walter Isaacson. And later, the Sunday funnies.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RATIGAN: Why does Tim Geithner still have a job?

(UNKNOWN): Well, I'm not sure, Dylan.

(UNKNOWN): We need a new economic team that cares about -- more about jobs, Main Street, and the American people than it does about Wall

Street and huge bonuses.

CASEY: I appreciate your -- your public service. I voted for your confirmation, and it was the right vote.

(UNKNOWN): For the sake of our jobs, will you step down from your post?

GEITHNER: I agree with almost nothing in what you said, and I think

almost nothing of what you said represents a fair and accurate perception of where this economy is today.

(END VIDEO CLIP)

STEPHANOPOULOS: Tim Geithner fighting back on Capitol Hill and came under some fire as he was testifying (inaudible) sign of some real populist anger out there. Let's discuss it on our roundtable.

I am joined, as always, by George Will, by Walter Isaacson, the president of the Aspen Institute, also author, biographer of many subjects, new book out, "American Sketches: Great Leaders, Creative Thinkers, and Heroes of a Hurricane," Bob Reich of the American Prospect, also a professor at U. Cal, Berkeley, and Liz Cheney, former State Department official and now the chair of Keep America Safe, a Republican advocacy organization.

And, George, let me...

CHENEY: Not Republican. Just national security...

(CROSSTALK)

STEPHANOPOULOS: Republican -- national security. A lot of Republicans on it, but national security. George, let me begin on the economy. I want to also add, though, one other number from the new ABC poll that just came out today, and it shows -- and they asked, in the last year, have you or has anyone living in your house lost their job? February, 18 percent. Today, 30 percent, 30 percent either living with someone or lost a job themselves. And I think that's almost certainly what's fueling the kind of fire that Tim Geithner got this week.

WILL: That's right. People feel that there's a huge displacement of priorities in Washington. The economy is in deep trouble, and we're piling a new entitlement with taxes on top of it.

Mr. Geithner ran into this -- this buzz storm, and it's going to get worse, because after the 2001 recession, as after the 1991 recession, job losses continued after the recession ended for more than a year-and-a-half. So this is going to be with us for a while.

And Geithner, who knew that Ron Paul would be the big winner out of all this? Ron Paul actually got passed a measure to make the Fed more transparent, because the Fed, of all things, is now becoming a focus of indignation.

REICH: Well, I agree with a lot of what George said. Look, Geithner is not going to resign. He's not going to be forced to resign. He's not going to be asked to resign. But the pain out there cannot be exaggerated. People are hurting, and they see Wall Street going up, and they see their own jobs in greater and greater jeopardy.

And that disjuncture is creating in this country not only a kind of populist anger, but also a need in Washington for a scapegoat. Washington thrives on scapegoats. And unless the job situation turns around soon -- and, George, you're right, it's not going to. We're going to see 10 percent at least unemployment through the next year, leading up to the midterm elections. This is going to be a huge, huge...

(CROSSTALK)

WILL: You think it (inaudible) get to 11 percent?

REICH: Sorry?

WILL: Do you think it will get to 11 percent...

REICH: No, I don't think it will get to 11 percent. But, remember,

the official rate of unemployment disguises all of the people who are working part-time and who'd rather be working full-time, all the people too discouraged to look for work, all the people who aren't working in full-time jobs who are working at less than -- than they had before. Look, out in the -- in the -- in the states and cities, this is the number-one issue.

(CROSSTALK)

STEPHANOPOULOS: ... administration make, though -- and it doesn't get a lot of political traction, even if it's substantively true -- is, it could have been much worse.

ISAACSON: Well, absolutely. I mean, ever since Andrew Jackson, you've had a strand in the American DNA that the populist anger at the coziness between the big banks and finance and government and the elites. And the problem is, right now, there's an odious smell of truth to that, because in the report we had last week, we saw that saving AIG sort of helps all the big banks that are now -- including Goldman Sachs...

(CROSSTALK)

STEPHANOPOULOS: ... Goldman Sachs.

ISAACSON: You bail out Goldman Sachs by saving AIG's credit default swaps, and that allows these big bonuses, while everybody's worried about losing a job.

So I think Geithner is getting a bum rap in some extent. I remember a year ago, you know, my wife was wondering -- taking money out of the bank and buying CDs in other banks, because we were all scared the finance -- the whole financial system would go over the cliff. We thought foreclosures would wipe out whole, you know, cities. That didn't happen. They saved us from going off of a cliff, but you end up with this unemployment problem.

And my worry -- and this is something, you know, you've written about a lot, Robert -- is whether this is not just cyclical, but structural, that we've lost basic jobs, you know, in manufacturing and everywhere else that will never come back.

CHENEY: Well, you know, and I think, you know, the other problem with that argument, that it could have been much worse, is the president

himself, when they passed the nearly $800 billion stimulus, said, you know, this is in part so that we can avoid approaching double-digit unemployment. So now that we're at double-digit unemployment, I think there are a lot of people out there who are frustrated having listened to the promises.

And you've got an interesting phenomenon where I think you've got people out around the country very concerned about unemployment, concerned about the direction of the economy, watching folks back here in Washington and not having a sense that people in the White House in particular, but also in Congress, are really addressing the issue, really dealing with it.

And I would add that the -- the interesting thing that you've seen this week is Democrats piling on and the extent to which, you know, the White House is now being criticized very openly and publicly by Democrats, saying things like, we're tired of walking the plank. We're tired to casting tough votes on things like cap and trade, which they will pay a price for back home, while the president seems to sort of float above all of this.

REICH: Yes, Liz, I think that the real mistake the White House made is, number one, low-balling the stimulus. It should have been much greater than, you know, the $700 billion, $800 billion.

STEPHANOPOULOS: That just wouldn't have passed.

REICH: Congress -- well, you know, George, at that time, nobody knew how big the problem was going to be, and the administration at least could have started higher. A lot of that stimulus was tax breaks that were temporary. We know that tax breaks that are temporary don't really create much spending. You've got to have more.

Secondly, the mistake was to say unemployment, our goal is to get it no higher than 8.2 percent. Well, now it's 10.2 percent.

STEPHANOPOULOS: So it's the over-promising problem?

REICH: And it over-promised.

WILL: Well, a quarter of the stimulus has been spent, and the administration is saying it's been a rousing success and such a failure we need a third stimulus, forgetting the February 2008 stimulus that preceded the January 2009 stimulus.

Now, we had, thanks to Jonathan Karl of this network this week, we got a look into some of this terrific job creation, such as the 317 jobs

created at the Head Start in Augusta, Georgia, which turned out to be 317 people who were already hired got raises, and nine jobs created in Campbellsville, Kentucky, by an $809 boot order from the Army. I mean, bogus jobs with bogus industries in nonexistent...

(CROSSTALK)

REICH: ... arguing that the -- that the stimulus had no effect?

STEPHANOPOULOS: Because I want to bring...

(CROSSTALK)

WILL: I think -- I'll tell you one effect it had. It has extended unemployment by extending unemployment benefits.

(CROSSTALK)

STEPHANOPOULOS: Let me just bring in -- bring in another chart here to -- on this. And it shows a selection in the New York Times yesterday. Three different independent firms -- IHS, Global Insight, and macroeconomic advisers at Moody's Economy.com -- all showing, by 1 to 3 percentage points, GDP would be lower but for the stimulus.

REICH: The stimulus clearly has had a positive effect. I think the problem, though, is that it has not had enough of an effect. And given the gravitational pull of the midterm elections, we're going to see a huge effort in this town very shortly, and immediately upon health care effect (ph), probably before Christmas, to kind of come up with jobs programs. And some of these work and some of them don't work, but it's important in this town to show America that you're trying to do something about...

(CROSSTALK)

ISAACSON: Well, look, you did have 3.5 percent growth rate in GDP in the third quarter. And that's pretty astonishing, given the fact that we thought we might in the greatest financial crisis since the Great Depression a year ago.

The problem with another jobs program and all is you're going to get hundred more type things that George has just talked about, which is, you know, little scandals and all. And, secondly, I think Obama really has to, starting next year, say we're going to put us on a fiscally responsible approach, and we're going to have to start cutting spending, because that's the long-term problem. We're not going to have growth in this economy unless we can have some fiscal responsibility.

REICH: Wait until the -- wait until the bonuses come out at the end of the year on Wall Street. If you think populism is now large and angry, you haven't seen anything yet.

CHENEY: But I think that, you know, there's a fundamental question here, which is, what kind of stimulus? What's the nature of an effective stimulus? And I think you're seeing now increasingly people saying, look, the kind of stimulus we need is a private-sector-driven stimulus. We need the kind of incentives, frankly, that the health care bill gets exactly wrong, that will allow the private sector to hire more people, will allow them to create jobs.

And they're sitting back sort of watching while we've got a stimulus that hasn't worked, because it didn't have enough of the kind of tax incentives and tax cuts that the private sector needs, and a health care bill that's about to really compound that problem.

(CROSSTALK)

STEPHANOPOULOS: ... into the deficit problem that Walter talks about. That's going to cost money, as well. Let's...

WILL: The administration's not worried about deficits, because they

say, their projection is we will have deficits more than three times larger than the post-Second World War average for the next decade, yet economic growth will be faster...

(CROSSTALK)

REICH: There's so much confusion about this deficit issue. Can I just -- in the short term -- that is, until we start to see real growth and jobs coming back -- we want deficits. Deficits are not bad. You know, John Maynard Keynes is being exhumed as we speak.

In the longer term, once we see growth and once we get jobs starting to come back, then we really do have to pull in the money supply and get serious about entitlement reform, but not now.

STEPHANOPOULOS: One of the questions is, how much time will the Chinese give us? President Obama in China this week. Thank you for that segue.

(LAUGHTER)

And -- and -- and real questions over how much -- how much he achieved on this trip. And let's talk about that a little. Let's first show him at a town meeting, I believe in Shanghai.

(BEGIN VIDEO CLIP)

OBAMA: First of all, let me say that I have never used Twitter, but I think that the more freely information flows, the stronger the society becomes, because then citizens of countries around the world can hold their own governments accountable.

(END VIDEO CLIP)

STEPHANOPOULOS: The irony there, George, of course, is that -- that town meeting was not broadcast across China. Blogs that reported on it were shut down. On the other hand, the administration says they made progress behind closed doors.

WILL: Well, it must have been behind closed doors, because in -- in the open doors, he had a press conference at which no questions were allowed. This was, it seems to me, a studied, calculated insult to the president. And if George W. Bush had conducted a trip like this, where he got nothing except insults, this town would be incandescent.

ISAACSON: Well, you know, he's right. The free flow of information is crucial for any economy that wants to grow in the 21st century, which is why I'm not as big of an optimist about China's economy in the long run or worried about revaluing the currency, which everybody said Obama should do. I think the market will take -- you can't jawbone currencies that well over the long term. And I'd rather bet on an economy like India where everybody's trying to invent Google apps than an economy like China, where they're trying to censor the Google apps, and that's what he's talking about.

STEPHANOPOULOS: And, of course, the -- the prime minister of India coming this week. But to pick up on George's point, Bob, I think any president who went at this time probably would have done something similar to what President Clinton did on his trip. I think -- President

Bush likely would have handled himself the same way, probably faced more criticism.

Is this just reality now, in that one of the things we have to deal with is the fact that our relative -- our power relative to China is declining?

REICH: We do not have a strong hand. Obama did not have a strong hand going to China. I don't know exactly what the trip was arranged to

do, what the objective of the trip was. And I think one of the problems, George, is that he went there without any clear indication of objectives, came back without anything, and made himself open to the charge that we are weak and that he was basically used by the Chinese.

But, George, your point is exactly right. We are now in a position where the Chinese are our -- our major lender. We owe them a great deal of money. They are keeping our economy going, in a way, right now. They are growing at an extraordinary rate. They are not nearly as big as we are as an economy, but they are certainly moving in that direction. We need them much more than they need us, and they know it.

CHENEY: I think that...

WILL: One -- except they need us in one particular. The only real threat to that regime right now would be large-scale unemployment in China that could destabilize it. That depends on selling flat-screen televisions and microwaves to robust American consumers.

REICH: Exactly. And that's why the yuan is not going to go up, because it's a social program.

(CROSSTALK)

REICH: Keeping their currency low is a social program for them.

STEPHANOPOULOS: The Chinese did show again this week that they are still somewhat in fear of their own people, which is why they clamped down so...

(CROSSTALK)

CHENEY: Right. And I -- I would disagree with Bob to the extent that -- that our weak hand is of our doing. And, you know, when -- when

you go to China and you basically got, it looks like from the outside, two major objectives you're trying to achieve, one is devaluation of the currency, encouraging them to move to a free-market model, and, secondly, is getting them onboard on Iran, and you've either not done enough groundwork or you have naively believed that if you refuse to meet with the Dalai Lama and you, you know, defer decisions on arms sales to Taiwan that the Chinese will fall in line, you're not going to accomplish anything.

So, you know, we had yet another foreign trip which was I think, sadly, style over substance. And, you know, the problem is that -- that, with each of these trips, we're weakening ourselves. And we are sending a very negative message to our allies in Asia and -- and around the world, frankly, that we are willing to let the China regime stage-manage a trip like this.

And -- and I get a sense there's no understanding inside the White House about the value of America power and prestige. We certainly are more powerful than China. And we should not be, through our words and actions, giving the impression that we believe we are two equal superpowers in the world.

WILL: For 37 years, every administration has bet, since Nixon went to China, on a theory, and the theory was that capitalism, market economy, which requires a judicial system to enforce promises, which are called contracts, needs a vast dissemination of information and decision-making that capitalism by its mores and working would subvert the regime, that you could not have an authoritarian market society.

It's the Starbucks fallacy. It turns out to be a fallacy, that if the Chinese have a choice of coffees, they'll want a -- they'll demand a choice of political candidates. We may be wrong. It could be...

(CROSSTALK)

ISAACSON: Yes, but we may be right. That is, actually, you know, there's some great truth to that. And in the long run, you're not going to be able to sustain an economy where you allow people all sorts of choice when they're trying to do their business, but don't allow them the...

(CROSSTALK)

CHENEY: ... as an American president, you can demand -- sorry, just

one thing -- you can demand, when you go into China and you're going to have a press conference, you can say, "We're taking questions." I mean, there are very clear things, steps you can take to send the message that we actually believe in freedom and democracy.

REICH: I agree with Liz. I think that -- that in preparation for this trip, as in many others, even the trip to Europe to try to sell Chicago as the Olympics, there needs to be more thought about the appearance of weakness or strength that may come out of the trip.

But I want to go back to, George, your point, because I think the big issue over the next 10 years and the big contest is going to be between authoritarian capitalism, a la China, and democratic capitalism,

a la the United States. And it's not clear to me that authoritarian capitalism is not going to win, that is, it -- there is so much efficiency. The Chinese say, "We're going to build 10 new universities. We're going to build this. We're going to build this." And, boom, it happens.

STEPHANOPOULOS: You guys manage to do it every time, right and left

agreeing on a -- seeming to agree on a pretty fundamental...

(CROSSTALK)

REICH: ... on Democratic capitalism, but I think that the -- authoritarian capitalism, we cannot understate the threat to the way we go about our -- our business, the way we think about the world.

(CROSSTALK)

STEPHANOPOULOS: ... of course, the president a bit preoccupied while he's overseas, planning his announcing on Afghanistan and on troops to Afghanistan. And one of the key elements, George, is that the

president is trying to convince some of our NATO allies to increase their troop commitment, as American troops are increased, as well, which seems inevitable.

WILL: Well, the problem is that often those troops come so encumbered with domestic restraints imposed by their governments as to what they can and cannot do that they're hardly worth the trouble to get

another thousand Germans or Dutch soldiers over there, not disparaging the efforts they're making, but they are circumscribed.

The danger is that the president is going to be seen as escalating this war. He'll do it half-heartedly with his heart not in it, he will lose his party, and he'll be supported by Republicans of the stripe of Liz Cheney, and that's not a sustainable path.

CHENEY: Well, let me just say that what I will support is the strategy that actually will win in Afghanistan, a strategy that's the one that was laid out by General McChrystal, and I think it's just completely inexcusable that we've now had month after month after month of photo-op out of the White House and no decision.

The president is very fond of saying, "Before I commit troops, I'm going to think very carefully about it." Somebody in the White House needs to remind him: He's already committed troops. We've got American men and women in Afghanistan today, because we've got to prevent Afghanistan from again becoming a safe haven for Al Qaida. The cost of walking away, the cost of defeat, the cost of retreat is huge. They're fighting there today, and they're fighting without the kind of resources and reinforcements that he needs -- that they need.

(CROSSTALK)

STEPHANOPOULOS: ... does -- does he have to worry about Republicans pulling the rug out from under? I think George's political analysis is dead right. He is not going to get votes from Democrats on increasing troops. Will Republicans stand by that recommendation, if the president makes it?

CHENEY: Republicans will stand by a recommendation that -- that allows us to win a war the president himself called necessary. I think it is absolutely critical that we win in Afghanistan. Now, George isn't standing by the recommendation. I mean, George has got a different view on this.

STEPHANOPOULOS: He's got a different view. I'm talking about Republicans in the House and the Senate.

REICH: Look, the president has failed so far to indicate specifically to the American people what our objective is, how we know we're succeeding, and how we're going to get out, and this is exactly what we went through in Iraq.

I mean, the American people, putting apart -- putting aside Democratic versus Republican partisanship, the American people don't want another Iraq. They don't want to go into a place where you have a corrupt regime or Karzai is not a -- a partner who can be relied upon and just get embroiled into...

CHENEY: They also remember, though, Bob, what happened the last time we walked away from Afghanistan. And the stakes here are so tremendous. The last time we left Afghanistan, Al Qaida was able to gain a foothold, and it was from Afghanistan that the attacks of 9/11 were carried out.

REICH: But Pakistan is the issue.

CHENEY: So I think it's...

(CROSSTALK)

REICH: Pakistan is the place.

CHENEY: That's right, but you can't deal with Pakistan without Afghanistan.

ISAACSON: But -- but, Liz, it seems to me that the whole strategy of trying to secure and hold and then occupy large parts of territory is going to in the long run and the medium run be a no-win situation for us.

We have to fight. I mean, nobody is going to appreciate us going in and trying to secure an occupied territory. It's the type of thing that's not in our DNA, an occupation like that, so we need a strategy that seems to me -- somehow to support those anti-Taliban forces -- Dexter Filkins has a great article in the New York Times today about ways to support indigenous anti-Taliban forces without us having to occupy...

(CROSSTALK)

CHENEY: But what we learned -- but what we learned in Iraq, Walter, was that the way that you actually go in and secure area is by giving the people in that area the kind of confidence that they need to know...

ISAACSON: But the Sunni uprising...

(CROSSTALK)

CHENEY: ... to know that we are going to be there. The Sunni uprising, though...

(CROSSTALK)

CHENEY: The Sunni uprising, though, if you look at the timing of it...

(CROSSTALK)

CHENEY: ... the awakening, was -- was very much tied to the surge and very much tied to when the Iraqi people realized that we weren't going to abandon them. We need people in Afghanistan to give us intelligence. We need them to tell us...

(CROSSTALK)

STEPHANOPOULOS: But this is -- this is a big argument because...

CHENEY: ... if they think we're leaving, they won't -- they won't do it.

STEPHANOPOULOS: But the -- the president would argue -- and Democrats would argue -- that it was only the certainty that we would eventually leave that convinced Iraqis to take matters into their own hands, as well, and (inaudible) apply that same argument in Afghanistan.

WILL: And now the -- the problem is that the Afghan villager has to make a choice. Does he bet his long-term future on the presence of the Taliban, which is indigenous, or the United States, which is not going to be there forever?

STEPHANOPOULOS: We only have a minute left, George, and...

(CROSSTALK)

STEPHANOPOULOS: ... real quickly, Sarah Palin -- and we only have a second here -- she sold 700,000 books this week, touring all across the country. Just quickly, 15 seconds each, did she advance her political career? Does she want to?

WILL: I'm not sure she wants to; I don't think she did. She's selling lots of books. That's not politics.

ISAACSON: Well, those of us who write books and then go on tour and try to sell them can't help but admire the wonderfulness of this (inaudible) you know, sort of thinking you might run for president. I think Colin Powell did that. I'm sure Lou Dobbs will do it, as well. I'd love to...

(CROSSTALK)

ISAACSON: But I do think it shows that she's a very clever person, very smart. I'm not sure she's a serious person, and this is not showing her as a serious person.

REICH: You know, rarely -- with regard to this books -- book -- rarely has so much been made about so little. And I think the real significance here is 2012. And the question is, Palin populism versus Romney respectability...

STEPHANOPOULOS: Ten seconds.

REICH: ... for the Republicans.

CHENEY: Whether we walk away from Afghanistan in defeat is much more in the long term than how many books anybody sells.

STEPHANOPOULOS: And that is the final word today. Thank you all very much. They're going to continue this in the green room on abcnews.com. You can get political updates all week long by signing up for our newsletter. It's also on abcnews.com.

END

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