Transcript: Senior WH Adviser Valerie Jarrett

SHARPTON: And no one is more concerned about the 9.8 unemployment rate than I am. But at the same time, you have to stop the job loss. I live in New York. People forget that when we saw the Wall Street companies go down, the financial services jobs that ordinary people lost on the ground, we had to stop the hemorrhaging. And I think that a lot of Americans which is why President Obama's poll numbers are staying as high as they are, understand that he inherited a bad hand.

He got the key to the bank with no money in the vault and the people that took the money are asking him, why aren't we making withdrawals? I think he has got to deal with what he was handed, and I think that that it is not just blaming the Republicans, it's reality. He was handed a bad hand.

BROWNSTEIN: You know, there's a short term and a long term arc to be looking at here. I think that in the near term you do have movement among independents toward a -- especially white independents, toward a more skeptical Perot-esque view of government, and you add to that the fact that the electorate in 2010 is going to be older and whiter than the electorate in 2008, and younger and non-white voters are the core of the Democratic Party. That kind of adds up to what could be a difficult election in 2010.

But if you look over the longer arc toward 2012, I do have to wonder if Republicans are drawing the right lessons here, because in some ways they are responding to Obama's effort to expand government by becoming more aggressive in their proposals to retrench (ph) government.

You had four-fifths of House Republicans vote this spring to convert Medicare into a voucher for everybody under 55. And you've had three-quarters of House and Senate Republicans vote this year to lower the top marginal tax rate for the wealthiest to 25 percent, the lowest level since 1931.

Now that's not going to be part of the debate in 2010. It's going to be a referendum on Democrats. But when you get to 2012, if that is the trajectory of the party, I think Obama has an excellent chance of recapturing some of those independents who are skeptical.

STEPHANOPOULOS: A lot will depend on whether health care passes, and what kind of impact it has had on people by 2012, as well. And this week we did see some major movement. You saw the House of Representatives announce their bill, also Senator Harry Reid on this whole issue of the public option, choosing to side with his Democratic base rather than Olympia Snowe, who the president had decided to go with on the public option.

Yet what he couldn't say at the end of that press conference was that he had the votes to get this to the floor and pass it.


SEN. HARRY REID (D-NV), MAJORITY LEADER: We have 60 people in the caucus, it's -- the comfort level is kind of -- we all hug together and see where we come out.


STEPHANOPOULOS: A gamble forced by necessity, right, George?

WILL: Yes. Now the president has now declared swine flu an emergency because the government hasn't done very well in coping with an epidemic we saw coming. Now at this very moment we're saying what we ought to do is expand radically the role of government in handling health care.

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