'This Week' Transcript: Gov. Schwarzenegger

GEORGE WILL: Yes, because among other things the pensions would then go to the Pension Benefit Guaranty Corporation which is already $14 billion in debt. But earth to Governor Granholm, she said the automobile industry would crumble. It's crumbled. It's collapsed. People who say General Motors is too big to fail have not noticed that it has failed. This week a statement from General Motors, official statement said that General Motors' board sees nothing, nothing in the performance of its management team to cause them to lose confidence in it. How about the complete evaporation of shareholder value?

PAUL KRUGMAN: You know, this is an agonizing thing. If this were any - if it were any kind of normal time, the answer would be clear. Let the thing go into bankruptcy, Chapter 11, continues to operate, restructure a lot of stuff. There are two reasons why this is a big problem now and why I'm kind of very reluctantly screaming in favor of some kind of bailout. One is that the credit markets are frozen. So normally a company can keep operating, declare Chapter 11 but keeps operating but that depends on being able to continue to get credit lines to do business. And you can't do that right now. So Chapter 11 quickly becomes Chapter 7 which is liquidation. So we actually see the thing disappear and then we're talking about a million plus jobs probably disappearing. The other is we're in the middle of this terrible, terrible slump and letting GM go under is an enormous anti-stimulus policy. It would be working towards a major negative blow to the economy just, you know, so we're really in St Augustine territory here. Grant me chastity in continence, but not yet. You know, this is not a good time to stand on principle and say we shouldn't bail these guys out.

SAM DONALDSON: Well, thank goodness I can take a forthright position. I'm with both these guys. In the long run - George is right - in the long run we need to preserve the marketplace philosophy of how we've run all these years. In the short run I think Paul is right. If we don't try of get hold of this tape worm with this terrible medicine right now because the medicine is not something we want to keep in our system, believe me, I think the tape worm can consume enough that we're going to be for years regretting it. It's better to put money into it now and people say, well, they'll be back in a year, they'll be back in a year for more. They may be.

COKIE ROBERTS: But that, there was – there is...

GEORGE STEPHANOPOULOS: And that's the real problem. That somehow the money won't work anyway.

COKIE ROBERTS: That's the problem is that they're basically saying, trust us, and you know, they're saying, don't use the 25 million that we've already got in the pipeline because that is there to have us get more fuel efficient cars. And we have to have more fuel efficient cars in order to survive. So let's keep going with that money to do the thing that will be a long-term survival and give us some short-term money to keep us up and going. But that means you have to trust them that they're going to do the right thing and have the...

SAM DONALDSON: Well, we have to have strings, Cokie.

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