REICH: Absolutely. And I think that when we talk about -- or anybody talks about hitting bottom, what we really have to understand is that the bottom is a kind of an undefined concept here. We don't know what a recovery is because we can't go back to the old economy which was based on debt and Wall Street getting out of control. So what is a recovery? What is a kind of the economy of the future? Nobody knows.
STEPHANOPOULOS: ... first of all.
WILL: Well, that's right. And the trouble is the American people, in their native perversity, have started to save money. It's the same exact...
WILL: ... 4 or 5 percent? And since 70 percent of our economic activity in what we used to call normal times is personal consumption, is that compatible with ... DONALDSON: That is exactly what a recovery is. Some guy said I saw a quote in the paper I use this test, do I want it, do I need it? And if I don't need it I don't buy it. We have to get to the point where people buy what they want.
REICH: George puts his finger on what is the real dilemma here. And that is what is rational for the family in terms of saving money is irrational from the standpoint of the economy as a whole. The banks that survive the stress test, for example, are they going to go back to lending like they did before? They can't possibly.
STEPHANOPOULOS: Let me press you on that for a second. Because a lot of economists like Paul Krugman on this program, like you, like Joe Stiglitz, Nouriel Roubini, thought there was no way that this approach that the administration was taking was the right course. You believed that we should go in more radical, temporarily take over the banks. Can you now say, though, that the Geithner approach, the more tempered approach was right?
REICH: Well, what we can say on the basis of very preliminary evidence is that the stress tests have fulfilled the goal that they set to fulfill, which was to reassure potential investors in a bank.
(UNKNOWN): Public relations.
REICH: No. It's confidence. It's to make sure and reassure potential bank investors that there are not worse problems hiding there.
ROBERTS: But there are ...
DONALDSON: ... not stressful enough.
REICH: It's a distinction. It's not the same thing as ...
ROBERTS: But there are worse problems, is Fannie and Freddie, which are in terrible shape and going to need even more ...
STEPHANOPOULOS: $19 billion, right?
ROBERTS: More and more government infusion. At the same time you're saying, oh, well, gee Bank of America only needs $34 billion ...
DONALDSON: And the stock went up $1.26.
ROBERTS: Then you still have these now have been taken over by the government needing government infusion.
STEPHANOPOULOS: That's all true. Right now there's about $110 billion in the TARP, in the rescue fund. Some banks are maybe going to be giving money back, JPMorgan is going to be giving money back, Goldman Sachs is going to be giving money back.
That number is actually going to go up before it goes down. Maybe some of it has to go to Fannie Mae and Freddie Mac, maybe some to GM. But you're going to have probably a pot of money of about $100 billion, there, George Will, that may be available for either more bailouts or more government investment or spending.
ROBERTS: Just what you want, George.