Transcript: National Security Adviser Gen. James Jones and Sen. John McCain, R-Ariz.

On the other hand, the president submitted a budget this week that has $1.2 trillion of new debt. Now that's borrowing that has to come from somewhere. And a lot of it's going to come from domestic capital because we can't count on our allies to continue buying our debt as they have in the past.

And the question is whether this will crowd out private capital investment, crowding -- no doubt lead to inflation, and nip the recovery, such as it is, in the bud.

STEPHANOPOULOS: What's the answer?

REICH: Well, the answer right now is that we don't have to worry about that because we have so much underutilized capacity. One out of 10 Americans who are either unemployed or just give up -- have given up looking for work that we do need to spend.

The government is the spender of last resort. Now eventually two years from now, three years from now, we are going to have to worry about possible inflation and the Fed is probably going to have to pull in its horns.

But right now is not a time the government ought to worry about those kinds of things.

DONALDSON: Some people say good news on the unemployment front because the number was a little lower than the last four or five months. And it reminds me of somebody during the Great Depression where we had 25 percent of our people were out of work. And someone said, yes, but it has leveled off, you know? I don't...

STEPHANOPOULOS: I know, can you imagine, five years ago, someone said we lost 500,000 jobs this month, good news.


DONALDSON: I don't know much about it except I buy the idea that until the banks are stabilized, until they can lend again, until the potential $600 billion of toxic mortgages can be dealt with, we're not going to be able to get back to a full measure of spending, lending, and buying.

And they've got a program right now that has something to do with public and private money combining to buy these mortgages. But it hasn't gotten off the ground. And a lot of economists think it won't work anyway.

ROBERTS: Well, the banks -- there was good news on the banks front too though this past week. I mean, again, what is good news? But, you know, that they weren't in as bad a shape as was feared.

So I think what the administration has to be careful here is that they don't want people to think that it has turned around, because, first of all, it hasn't, but second -- and the unemployment numbers are going to get worse before they get better.

But secondly, they still have a lot of grand plans. And if people think that the economy is writing itself, it's going to be very difficult for them to carry through on these grand plans.

STEPHANOPOULOS: That's definitely true. But they do believe -- and I was talking some people on the economic team this week. They believe there's a chance that the recession will actually end in June. That we'll actually see growth in the third...

ROBERTS: Well, we've heard Bernanke say that he thought there would be growth...

DONALDSON: End of the year.

ROBERTS: ... in this year.

STEPHANOPOULOS: At the end of the year, but the problem, you get at it with the jobs. And, Bob, check me on the numbers here, in order to start creating jobs again, bringing down the unemployment rate, you don't only need growth, you need 4.5 percent growth for a sustained period of time.

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