'This Week' Transcript: Gov. Schwarzenegger

GEORGE WILL:We would also have to trust the Congress which gave us Amtrak that it's - they know how to design automobiles. That's what they're doing in that building behind us is deciding what automobiles ought to be designed on what timetable and will the market buy them? Well, they've already decided the market won't buy the Volt, the electric GM car, because the Congress has already written in a $7,500 tax credit to try and bribe buyers for this otherwise unsaleable product.

SAM DONALDSON: How do you know? It's not out. It won't be out till next year.

COKIE ROBERTS: Until the end of next year.

GEORGE WILL: They've already written it in. They know.

GEORGE STEPHANOPOULOS: But it leads to a separate question because it does look because of these complications like Congress probably will not act...

PAUL KRUGMAN: Yeah.

GEORGE STEPHANOPOULOS: ...this week.

COKIE ROBERTS: That's right.

GEORGE STEPHANOPOULOS: And then nobody is back until January 20th. And I guess one of the questions I have is can GM especially last until January 20th? And if they go into bankruptcy, will consumers just say, wait a second, there is no way I'm buying a car from a bankrupt company.

PAUL KRUGMAN: Right. This is, you know, from a political point of view almost if you're a Democrat, you say this is good because the issue will be taken out of our hands by force. But from the point of view of the economy, it's another major blow. So I think you have to - if I were Democratic congressional leaders, if I were Obama, I would say you have to make every effort to get something in place because, you know, this is - the trouble is the economy is in a deep nose dive right now and this is adding to it. This is just a really bad time to be doing long run virtuous things.

GEORGE WILL: Paul, one of the arguments made against bankruptcy this week was that that would obviate and perhaps, shred the existing labor contracts, under which GM retirees get health care. And it was said in print that would be terrible because that would hurt retirees too young for Medicare. Why are there retirees too young for Medicare? If people want to retire before 65 or 35, that's their business but it is not a national crisis.

PAUL KRUGMAN: Well, there's - that's - there are a lot of reasons why that happens. It's too complicated to get into.

COKIE ROBERTS: Right.

PAUL KRUGMAN: But the point of the matter is, look, again, everything is - if this were 1999, and we had 4% unemployment and a booming economy, I would have no hesitation in saying let the thing go. Let the market work. But it's not.

COKIE ROBERTS: Also, the labor contracts have been renegotiated to be very much in line with the labor contracts of foreign car manufacturers. So they've been trying to solve those kinds of problems. I just think that what Congress needs to do is come back this week and do a quick public works public service bill like they did in 1982 in the lame duck session after that congressional election when unemployment was at 10% and they came back and, you know, quickly got some infrastructure stuff up and running. We can always use better roads and bridges and there you go.

GEORGE STEPHANOPOULOS: Well that may be what they should do but it doesn't look like that's gonna happen this week either.

PAUL KRUGMAN: Right.

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