'This Week' Transcript: Gov. Schwarzenegger

GEORGE STEPHANOPOULOS: And now Sam, though, but because the problem is so great, economic advisers are telling Senator Obama, President-Elect Obama and I think Paul Krugman wrote this on Friday - $600 billion, that they're going to need a stimulus package far more than anybody talked about, $500 billion, $600 billion.

SAM DONALDSON: So, let's do it. So let's do it. I mean, again, this idea that somehow we shouldn't use extraordinary measures that we wouldn't ordinarily believe is good for us economically to try to stave off absolute disaster is nonsense. We need more, if that's what it takes. I agree politically, Cokie, it looks like nothing is going to happen in the lame duck session.


SAM DONALDSON: Now. But next year, I hope it's not too late. There should be a massive program and I'm for infusing it at the local level, for instance, mortgages, I want - I think John McCain had some sort of idea although he took it - let's buy out the mortgages of individual homeowners rather than say to the banks, okay, here we are. We'll help you and see if we can't keep people this their homes that way.

GEORGE WILL: Sam, one of the ways we turned a depression into the Great Depression that didn't end until the Japanese fleet appeared off Hawaii was that there were no rules and investors went on strike because the government was completely improvising. Net investment was negative through almost all of the '30s because, again, people did not know the environment in which they were operating because the government had the fidgets and would not let rules and markets work.

PAUL KRUGMAN: This is not the way - okay. Well, it's not the way I read the history. It's not the way - no.

GEORGE WILL: Am I wrong about net investment?


PAUL KRUGMAN: No, the negative net investment was because, you know, when you have 20% unemployment and all the factories are standing idle, who wants to build a new one? You don't need to invoke the government to explain that. No, what actually happened was, you know, there was a collapse of the financial system, which was not restored for a long time. There was a persistent deep slump in consumer demand and, therefore, no investment demand and so you were stuck in this trap. Roosevelt got the economy moving somewhat. By 1937 things were a lot better than they were in 1933. Then he was persuaded to balance the budget or try to and he raised taxes and cut spending and the economy went back down again and then it took a enormous public works program known as World War II to bring the economy out of the depression.

COKIE ROBERTS: Well, which is what Sam is saying. Throw anything at it that you can to try to stave off anything that disastrous.

GEORGE STEPHANOPOULOS: And that means most likely, Sam, though that the president-elect will have to put off any plans for tax increases.


COKIE ROBERTS: Or for health care or for a variety of other things.

SAM DONALDSON: George is right.

PAUL KRUGMAN: No, the way at least people like me are pushing, I think what will happen is there's going to be push for legislation to do things on health care. But that wasn't really ever going to happen. It wasn't ever going to go into effect until 2011. Because we weren't going to so much raise taxes as let the Bush tax cuts expire.

GEORGE STEPHANOPOULOS: In 2010. So you have a year's grace period.

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