Transcript: Sens. Chuck Schumer and John Cornyn

GILLESPIE: It means it's better to be a union autoworker than it is to be a bondholder at these auto companies, for one thing.


STEPHANOPOULOS: That's not that unusual. When the steel companies went under, the government didn't get involved in that and the unions were put at the front of the line there as well.

But, Gwen, I do think you raise an important question that they have to wrestle with right now. The government is now going to be the owner of General -- 70 percent owner of General Motors. But the question is, what kind of an owner are they going to be? And, Paul, everything we hear from Larry Summers and others are that the government is not going to be micromanaging these decisions, but...

KRUGMAN: But don't we (inaudible) them to?


STEPHANOPOULOS: If they do, then you're not going to get a lot of new investors who want to be in the middle of it all.

KRUGMAN: You could not have a more centrist economic team than this administration has, right? These people are -- are -- have no desire to control the commanding heights of the economy. Yes, there will be some pressures, but you know, this, in a way, if you are worried that the government is going to start, you know, micromanaging, they're going to start using all -- using GM to pursue all sorts of non-economic aims, the fact that the company is probably going to be losing money hand over fist for a long time is going to be a guarantee against that. They're going to be very eager to see this thing become commercially viable, or at least lose less money.

I think your fears that this is socialism, you know, it's just crazy. It's not going to happen, because they really don't want this albatross around their necks.

STEPHANOPOULOS: They want to get out?

KRUGMAN: They want to get out as fast as they can.

WILL: Let me give you another ricochet effect. The government is mandating smaller cars. The government wouldn't need to mandate smaller cars if the public wanted them, so the government is mandating cars the public hitherto has shown it does not want. That is an incentive for Americans to keep the cars they are driving longer, which will deprive Detroit of customers. Hence, we now have, to cope with that ricochet effect, there's a move on Capitol Hill to have something called cash for clunkers, where you will be bribed by the federal government to buy a new car.

KRUGMAN: You know, CAFE standards, which is what this is all about, mileage standards, fuel efficiency, that's about -- you know, there is a huge market failure. Actually, a couple of huge market failures, right? There is pollution, there's global warming, there is oil dependence. So to say, well, you're forcing the public to buy something it doesn't want -- well, you're forcing the public to actually recognize the real costs of some decisions that it makes, not taking those costs into account. There's nothing wrong with this.

IFILL: Why isn't that -- why isn't that nationalization? Why not just call it that?

KRUGMAN: It's not nationalization. Look, there's lots of things we would like to do. I'd like to burn coal in an open grate in my house, maybe, you know, and add to the smog over Princeton, but I'm not allowed to do that, because it does negative things to my neighbors, right? And so you know, there's lots of things that the government regulates, and this is one of them.

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