Transcript: Joint Chiefs of Staff Chairman Adm. Mike Mullen

BROOKS: Build something else here. But his essential problem is he's running a moderate George H.W. Bush foreign policy and he can't admit it to his own base. He had better start.

STEPHANOPOULOS: OK. Let's move on to California then. This is another tough issue for the president right now. California, $21 billion deficit. Could run out of money in July. Has already asked the federal government for some loan guarantees. President Obama in that C-SPAN interview said no. So did Tim Geithner, the treasury secretary, when he was up at Congress this week.

But when he was finally asked, are you going to rule out assistance, here's what he said.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: We will have to do exceptional things as we have done already to fix this mess. That's not putting on the table or taking off the table any specific thing like that. But I just want you to know that there are things that we've had to do I would never have contemplated doing.

(END VIDEO CLIP)

STEPHANOPOULOS: So let me put up for -- to remind everyone, 1975, the famous Daily News cover, Gerald Ford to New York City: drop dead, I think it's going to come up right there.

"Ford to City: Drop Dead," and, George, I'm reminded that a month later Gerald Ford approved loan guarantees for New York. Is that what we're going to see here with California?

WILL: I certainly hope not. Mr. Geithner did say it's a mess and we are going to fix it. No, it seems to me they've...

STEPHANOPOULOS: Ruled out TARP money, though. He said no TARP money.

WILL: Well, he said no TARP money because statutorily TARP is to be used for financial institution such as Chrysler and General Motors. It was a breath of fresh air for Geithner to say there is something the Treasury doesn't have authority to do with the taxpayers' money. That's progress but 10 percent of the Congress, approximately, comes from California and they will be heard.

DIONNE: You know, what California really needs is not a bailout but a constitutional convention. One of the reasons they're in this fix is because you can't get a budget through without two-thirds of the votes of the legislature. One-third plus one, in this case the most conservative members of the legislature can block the usual deal that you make to solve a problem like this.

WILL: An excellent thing.

DIONNE: And it's a disaster. It's created this problem. Then you have voters who can go to referendum and vote for programs without necessarily paying for them and so you have this problem at the heart of the California budget situation.

WILL: E.J., E.J. lays out the plan for fixing California by making it easier to raise taxes and transfer wealth from taxpayers to the public employees unions. That would be the solution that I would expect the administration ...

BRAZILE: It's drastic cuts in education and health care, laying off thousands of workers and I think the ...

WILL: Thousands of workers that added to the payroll during this crisis. BRAZILE: Of course, turning over undocumented illegal people over to the federal prison so we are going to have to help California find a way to close this budget gap. Maybe help them with their municipal bonds and make sure they can get on the market and get the best price but ...

STEPHANOPOULOS: So you think they will turn around.

(UNKNOWN): It's a lot of electoral votes.

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