Transcript: Senior WH Adviser Valerie Jarrett

BROWNSTEIN: You know, you -- I think you are going to see some warning signs for Democrats out of this election. I mean, you can make too much of these -- these off-year elections, but in 2006 and 2008 Democrats won independents substantially, both in the state races and at the presidential level.

In the last polls these week, in all three, Virginia, New Jersey, and New York 23, independents are moving toward the Republicans, largely, I think, around a size-of-government, scale-of-government, cost-of-agenda argument. I think you're going to see more pressure from Democratic centrists next year as the result for some kind of deficit reduction.

STEPHANOPOULOS: I want to get into that, because...

BROWNSTEIN: Can I just -- one quick point, having said that, President Obama's approval rating has stabilized over 50 percent with unemployment at 9.8 percent. When unemployment hit 9.8 percent under Ronald Reagan in July '82, he was at 41 percent approval. There is still a substantial base that supports Obama that puts him in a different position than Clinton was in, both legislatively and politically heading into that first midterm.

STEPHANOPOULOS: Right now I think that's exactly right. I think the other thing you're going to hear from Democrats, Dee Dee, if, indeed, Republicans win in both New Jersey and Virginia, is that in these off-year elections, those states always go to the out-party.

But if both states, both Virginia and New Jersey, go to the Republicans, that could have an impact on this health care debate.

MYERS: It could. You know, it could make a lot of Democrats -- or moderate Democrats in both the House and Senate very nervous. I mean, there is backlash against -- this can't be completely attributed to a bad economy and to an unpopular incumbent in New Jersey.

There is something afoot in the land that people are uncomfortable about, and one of the issues is spending. And that's probably the biggest issue.

WILL: Well, that's right. I mean they've seen, A, on Friday, we had the biggest contraction of the stock market in six months. The jobs numbers come out, and they say, well, the GDP is growing. People say, well, so what, where are the jobs? We've had "Cash for Clunkers," which was a government-engineered automotive bubble that promptly collapsed.

Our next stroke of genius in managing the economy from Washington will probably be to extend the $8,000 tax credit for first-time or multiple-time home-buyers, which is to say a government subsidy to get people into houses they cannot afford to be in.

GILLESPIE: And by the way, the "Cash for Clunkers," you know, which was a vaunted success supposedly, it turns out each of these cars, apparently, $24,000 per car is the estimated cost of these. The jobs that they attribute to stimulus, $71,500 per job. We're looking at now having $540,000 per household in debt imposed by this administration. That is jarring to people, and the jobs aren't there. The fact is, is that we saw Jared Bernstein, a White House economic adviser, on TV last week say that they expect job creation to begin the second half of next year, eight months from now.

STEPHANOPOULOS: Of course, what the White House says and their economic advisers say is that without these programs that we would have had 2 or 3 percent less...


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