'This Week' Transcript: Axelrod

Photo: This Week headliners for Sunday, July 11, 2010

TAPPER: Hello again. From the Gulf to the unemployment lines, from Kabul to Baghdad, America is facing many difficult challenges, and Democrats are facing a tough political environment.

With the exception of Michelle, Sasha and Malia, there's probably no one in Washington who knows President Obama as well as our guest this morning, the president's top political adviser and close friend, David Axelrod.

David, thanks for being here.

AXELROD: Jake, thanks for having me.

TAPPER: So the president's popularity among independents is sinking. It's a real problem for him politically. One year ago, he was at 56 percent approval with independents. Now it's 38 percent. Why do you think independents are turning away from the president?

AXELROD: Well, first of all, there are all kinds of numbers out there, so this is one set of numbers. There are other sets of numbers.

But, look, I think I've said this to you before. When I -- when I sat down with the president and his economic advisers, a group of us in the middle of 2008, and they told us what was about to ensure and -- about the recession that we were well into at that point, I said to him, you know, we're going to -- your numbers are going to suffer here, and we're going to have a difficult election, because these are going to be difficult times for the country.

Our job is not, though, to worry about that, Jake. Our job is to worry about how we get people back to work, how we move this country forward, and if -- if we do our job, the rest will take care of itself.

And, remember, elections -- the presidential election is an eternity away. Elections are about choices, though. They're not referendums. And on the other side of the ballot in November will be a party that has an economic theory, and it was tested, and it led to catastrophe.

We lost 3 million jobs in the last six months of 2008. The financial market almost collapsed. They turned a $237 billion surplus that Bill Clinton left into a $1.3 trillion deficit. And they're running on the same policies.

So people have to decide, do they want to go forward or do they want to go back?

TAPPER: OK, but you're a smart guy, and you know underneath these numbers are things other than the fact that we're in tough economic times. White voters in particular have developed an even stronger skepticism about the ability of government to perform effectively. That's the exact opposite message of President Obama's campaign theme of a competent, yet activist government.

Do you think you overestimated your ability to convince the public that government can be effective?

AXELROD: No, look, Jake, you say "that aside." You can't say "that aside." When you run your...

(CROSSTALK)

AXELROD: No, no, no, no. When you govern -- when you're governing in a very difficult economic time, the worst economy since the Great Depression -- and that's what we walked into -- people are going to be unhappy, and they have a right to be unhappy. These are difficult times.

And so this is not unexpected. And the best thing we can do is make the right decisions for the country, and that's what the president is going to do.

TAPPER: Well, let's talk about those decisions, because -- because obviously there is what Democrats on Capitol Hill call spending fatigue on Capitol Hill. How can you and how can the president create jobs without there being any willingness on Capitol Hill to spend money to do so?

AXELROD: Well, I think it's true that there's not a great -- there's not a great desire, even though there's some argument for additional spending in the short run to continue to generate economic activity. There's not a great appetite for it.

But I do think there are some things we still can accomplish. I do think that we can get tax -- additional tax relief for small businesses. That's what we want to do, additional lending for small businesses. They're an engine of economic growth. We're hoping we can persuade enough people on the other side of the aisle to put politics aside and join us on that.

Unemployment insurance, we ought to extend unemployment insurance. People are suffering.

TAPPER: You can't get the votes, though.

AXELROD: Well, we'll see. We'll see. But at a time when there's one job vacancy for five unemployed workers looking for jobs, clearly we have a responsibility to do it. The Republicans met that responsibility each time under President Bush, when he asked for -- to extend unemployment insurance. They ought to do it now. Let's not play politics with this issue.

But we also -- there are many other things that we can do. One of the things that's driving us in a positive direction is exports. And the president talked last week about how we expand exports and steps we can take to -- we are very committed to innovation in our economy and to spurring innovation.

The president went on Friday to a plant in -- in Missouri that is producing electric cars, and that -- that -- that plant would not be there but for the actions we took. The investments that we have made have leveraged four times on some of these clean-energy projects, four times private investment, and that's going to create jobs.

He's going on Thursday to Michigan to a plant that produces battery -- advanced batteries for electric cars. We had 2 percent of the global market when he started. We now have 16 percent, headed to 40 percent by 2015, because we helped spur and leverage private investment, and that's what we want to do.

TAPPER: Why do you think 7 out of 10 Americans don't think the stimulus had a positive economic effect?

AXELROD: Because we're still coming out of a very deep recession. Remember, it took years to dig the hole that we're in, and the president was clear from the beginning it was going to take a while to come out of this. Plainly -- plainly...

TAPPER: You spent more than $400 billion. Obviously, according to every economist, the unemployment rate would be higher would it not for -- would it not be for the stimulus bill.

AXELROD: Of course.

TAPPER: But the American people don't believe that.

AXELROD: But, Jake, we are still in the midst of a very difficult economic time. The fact that it's much better than it was when we took over does not mean that it's good. And we don't accept it that way. We accept the challenge of moving this economy forward, and we're going to keep launching initiatives, and they don't all involve spending.

Things like patent reform are things that -- is something that we want to pursue so that small businesses and start-up businesses with a good idea can -- can -- can move without the kind of bureaucratic obstacles that the current patent system provides.

TAPPER: Well, let's talk about the business community, because you're talking about things that they would like. But in the last few days, in the last few weeks, the business community, members of it, have been voicing concerns about the Obama administration.

Here's the CEO of Verizon and the chairman of the Business Roundtable, Ivan Seidenberg.

(BEGIN VIDEO CLIP)

SEIDENBERG: By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses.

(END VIDEO CLIP)

TAPPER: And the Financial Times reported that a member of the White House recovery board, General Electric CEO Jeffrey Immelt, in a private dinner recently, quote, "had harsh words for Barack Obama, U.S. president, lamenting what he called a terrible national mood and expressing concern that overregulation in response to the global financial crisis would damp a tepid U.S. economic recovery. 'Business did not like the U.S. president, and the president did not like business,' he said."

Now, I know you reject the notion that the White House and the president is anti-business. But if that -- that perception's out there, and it's having an effect on the business community's willingness to create jobs, is that not a failure of the Obama administration?

AXELROD: Let me -- let's just review history here. When we took office -- no, no, no, this is important.

TAPPER: Don't go -- don't go that far.

AXELROD: This is important, Jake, because you -- you have to recognize what the kind of -- you know, there's no doubt that there was a kind of "Katie, bar the doors" philosophy in Washington during the eight years previous to us. And what it led to was a financial disaster.

And all these companies were -- were in very difficult straits. In fact, their -- their profits are up 65 percent since -- since that time, over the last two years. Our financial system is now stable instead of collapsing, which would have been a devastating thing for every business in this country, large and small.

But, yes, and we're working closely with business and we want to continue to work closely with business, but working closely doesn't mean that we -- that -- that we simply turn away from the kinds of corrective measures that are necessary to prevent that kind of disaster from happening again, and that's what we're pursuing.

We need a financial reform that -- that is commensurate with the challenges that we saw, and we pushed for that. We need commonsense environmental policies to -- to prevent what happened in the -- in the gulf, and you can't simply let industry in each and every case self-regulate. We're not micromanaging anything, but we are looking after the public interest.

TAPPER: Let's talk about the BP oil spill, as long as you brought it up. BP is attempting this weekend to replace one cap with a more secure cap, but right now, the oil is spilling into the gulf unabated. Is the president worried -- is he watching what's going on in the gulf right now, this weekend, and is he worried it's not going to work?

AXELROD: Well, he's been fully briefed on a -- on a daily and more than daily basis on this. And our scientists have met and -- at some length with BP, and their technicians and scientists on this, and we have confidence that this is the right decision, because once this cap is on, we believe it will allow the capacity to -- to -- to collect all the oil that's leaking, and it'll make it easier to kill the well when those relief wells are completed in August.

So there is some short-term back step here in order to get a much more secure situation.

TAPPER: So he's confident it will work?

AXELROD: Well, yes, we have every reason to believe that this will work. You know, this is obviously uncharted waters. Everything about this is uncharted waters, no pun intended.

So -- but, you know, we think there is a very, very good chance that this -- this will provide the kind of relief that we need.

TAPPER: This week, the president recess-appointed Dr. Don Berwick as administrator of the Centers for Medicare and Medicaid Services, responsible for roughly $800 billion in health care spending. Republicans had wanted to give Berwick a hearing, and the chairman -- the Democratic chairman of the Senate Finance Committee, Max Baucus, said in a statement, quote, "Senate confirmation of presidential appointees is an essential process prescribed by the Constitution that serves as a check on executive power and protects Montanans and all Americans by ensuring that crucial questions are asked of the nominee and answered."

Aren't you setting the stage for a future Republican president to bypass the Senate's constitutional requirement of advise and consent just because that future Republican president doesn't want a political fight, which is -- seems to be the reason why you guys recess-appointed Don Berwick? He -- he could have had a hearing. You didn't want one.

AXELROD: Jake, you're a student of history, so you know that recess appointments have been a part of -- of administrations, Republican and Democrat, for a very long time.

TAPPER: Yes, but not because you want to avoid a hearing, usually because there's some other reason.

AXELROD: No, look, the hearing is not the issue. The issue is that we've had nominees who have had hearings and then have waited months and months and months for a vote. And the fact is...

TAPPER: Not Berwick.

AXELROD: ... the Republican Party -- the Republican Party has made it a policy in the United States Senate to hold up...

TAPPER: I grant you all of that.

AXELROD: ... as many nominations...

(CROSSTALK)

TAPPER: I grant you all of that, but that's not -- that's not Berwick.

AXELROD: But this is too -- this is -- but this is too important. This -- this position is too important. In the midst of implementing health -- health reform, it is too important to allow that kind of game-playing to go on. And the president needed to act, put someone in place, and get the -- and get policies in place that will make -- make the reform a success.

TAPPER: But Republicans were not delaying. Grassley wanted a hearing two weeks ago. The only game-playing...

(CROSSTALK)

TAPPER: ... you could say is that they were maybe going...

(CROSSTALK)

AXELROD: Jake, the delays -- the delays haven't occurred at the -- in the hearings. The delays have occurred after the hearing. In the first year of our administration, the Senate had to invoke cloture, in other words, to stop filibusters 21 times...

TAPPER: Right, I got it.

AXELROD: ... 21 times. That didn't happen once under the Bush administration.

TAPPER: I grant you all of that, but this one case -- there wasn't even a hearing. You didn't want to have a hearing, because he was going to be attacked.

AXELROD: That's -- we didn't -- we -- we wanted to move because we needed someone in place, and we knew that -- that the plan of -- on the other side was to draw this out, and we simply felt, given the gravity of the situation we face -- understand that Dr. Berwick is -- is -- is widely and highly regarded.

TAPPER: Absolutely.

AXELROD: Mark McClellan, who had this position under George Bush...

TAPPER: Thomas Scully.

AXELROD: ... Mr. Scully, yes, the American Medical Association, the American Hospital Association, the AARP, who has more than a passing interest in how the Medicare program is administered, have all warmly endorsed his candidacy. And there is no question about his -- his credentials or his preparedness or his -- or the desirability of having him there.

But what we don't want in this midst of an election is to -- is to let this be drawn out in a long kind of political circus while the job that needs to be done is not getting done or not getting done with the man who should be doing it.

TAPPER: All right. We're running out of time, so I only have a couple questions. In Afghanistan, the U.S. plan supported by General David Petraeus is to empower local village defense forces. President Hamid Karzai has expressed serious concerns about this, fearing it's going to lead to village militias. Will the White House intervene? Or is this just Petraeus' show to run?

AXELROD: Well, look, Petraeus has -- I think he met four times with -- with President Karzai last week. And he will work this through with him. Obviously, we want to work in partnership with the government there. And I think these issues will be resolved.

Ultimately, we want to create a situation where the Taliban is not -- insurgency is not on the upswing in these communities, and we want to take the steps that are necessary to -- to stop it. And I think both the Afghan government and -- and the United States has an interest in that.

TAPPER: Last question. It appears from the Blagojevich trial this week that the White House's version of what discussions occurred may conflict with the testimony of the SEIU's Tom Balanoff. Balanoff said that the president told him that Valerie Jarrett wanted to be a senator, and Balanoff told the president he would talk to Blagojevich. Did the president -- is that testimony correct?

AXELROD: I'm not going to comment on testimony, but I -- there's -- if you go back and look at the -- at the report that Greg Craig put out in December of 2008 for -- for the administration or the soon-to-be administration, he acknowledged that the president spoke to people within his staff and to people outside.

TAPPER: But it doesn't say that he spoke to somebody about how Valerie Jarrett met the qualifications and would be interested in being a senator?

AXELROD: Well, there -- look...

TAPPER: It was incomplete, at the very least.

AXELROD: The -- what -- what -- again, I don't want to comment on the -- but what nobody seems to disagree on is that the president wanted to bring Valerie Jarrett here to the White House...

TAPPER: Balanoff said that, too, absolutely.

(CROSSTALK)

AXELROD: ... and that no -- no offers were made in order to promote her candidacy and so on. And that -- those are the essential facts that I think people want to know and need to know.

TAPPER: All right, David Axelrod, thanks so much for joining us this morning.

AXELROD: OK. Thank you.

TAPPER: Arizona's new immigration law takes effect on July 29th. Already seven lawsuits have been filed to try to stop it, including the one filed by the Obama administration this past week. It's a legal and political debate that will play out throughout the rest of the year and the foreseeable future.

This morning, a special "This Week" debate. Representative Luis Gutierrez is chairman of the Immigration Task Force of the Congressional Hispanic Caucus. He opposes the Arizona law. Representative Brian Bilbray, Republican, chairs the Immigration Reform Caucus, and he supports it.

Gentlemen, thanks for being here.

GUTIERREZ: Good to be with you, Jake.

TAPPER: So, first of all, Congressman Gutierrez, just to establish our parameters here, is there a serious crime problem in Mexico that's spilling into the U.S. and necessitates more secure borders before an immigration reform bill should be worked on?

GUTIERREZ: I think we have a problem at our border. I think we have increased -- when I got to Congress, there were 5,000 Border Patrol agents. Today, we have 20,000 Border Patrol agents.

TAPPER: Do we need more?

GUTIERREZ: We may need more. We should do everything we need to do in order to secure that border. But we should do it in a comprehensive manner. And we should do it in a bilateral manner.

I mean, let's face it: It is also the craving for the drugs here in America which is driving the drug trade from Mexico to the United States.

So this is what we have. We have a border which we have put a lot of resources on, which the president has committed more resources to, but shouldn't we segregate -- that is, divide -- those criminal elements that exist, that are causing damage on both sides of the border?

I mean, there are people in Mexico dying every day, prosecutors, justice department, police, fighting these criminal elements. They're also damaging us. Should we have a joint response? Shouldn't that joint response say, we're going to secure that border. We're going to do everything. But let's separate those that are coming here, crossing that border, looking for jobs, who are also a victim and prey to that very same criminal element, from the criminals, and have laws the effectively combat the criminals and resolve our immigration problem?

TAPPER: Well, let's -- let's talk about that, because, Congressman Bilbray, I want to -- there's been a lot of overheated rhetoric in this debate. And I want to play this clip for you from last month. Here's the Arizona governor Jan Brewer.

(BEGIN VIDEO CLIP)

BREWER: They're coming across our border illegally, and the majority of them, in my opinion -- and I think in the opinion of law enforcement -- is that they're not coming here to work. They're coming here and they're bringing drugs, and they're doing drop houses, and they're extorting people, and they're terrorizing the families. That is the truth, Matt. That is the truth.

(END VIDEO CLIP)

TAPPER: Congressman Bilbray, that's not the truth. And I've never heard you make any comment along those lines. A majority of the individuals crossing the border are criminals and seeking criminal enterprise? Should that rhetoric be condemned?

BILBRAY: The majority is not -- they are not actively engaged in the drug traffic. The difference is the perception of those of us on the border, like myself who grew up down there, and somebody who's up -- up in the northern areas like Chicago see this differently.

She is seeing this, the fact that she's seeing the crime, she's seeing that her community is becoming the kidnap capital of the world. She's seeing the drugs tied to...

TAPPER: That's not necessarily true, either, by the way.

BILBRAY: Well, Tucson is supposed to be -- I mean, not in the world, but (inaudible) United States, a major issue here. But the fact is, anywhere in the United States, this place has gone out of control. We saw it in San Diego, and the same people that are opposing Arizona's actions are the same ones who said in San Diego our fences wouldn't work.

I think her perception is this. You cannot separate the drug cartels from the smuggling cartels. They're the same. You cannot separate the fact that the border region is out of control because there's all this illegal activity.

The problem is that Arizona took a leadership role two years ago when the United States didn't follow, and that is go to the real source. Watch out when they say secure the border, because the border is a symptom. The real problem is out-of-control illegal immigration getting to illegal jobs that are going all the way up to Chicago. But we're looking at the border.

You really want to secure the border? Secure the workplace in the United States. Have more ICE agents breaking down the -- the barriers to enforcement that we need to be breaking down the employment opportunities in places like Chicago. Then we'll be able to secure the borders.

TAPPER: Do you agree? Do you disagree?

GUTIERREZ: Here's the problem, and here's the fact that Mr. Bilbray leaves out of this debate. The fact is that 40 percent of the undocumented workers in this country didn't cross that border. They came here legally to the United States. They came on a tourist visa. They came on a student visa. They came on a temporary worker visa, and they overstayed their visa.

So what we do is we continue to focus on the border as if though that were the exclusive problem that we have with our immigration system and those staying here.

Look -- and we're in Washington, D.C. There are going to be tourists here this summer that aren't going back to their country, OK? There are going to be students that are going to graduate that aren't going back.

So what I would suggest to Mr. Bilbray is that we agree on so much. I am ready to work with him to put whatever more border enforcement -- although we have quadrupled the number of resources on that border, but we also have to look internally if we're going to end illegal immigration as we know it.

So here's where Mr. Bilbray and I agree, all right? Put more border...

(CROSSTALK)

TAPPER: More Border Patrol.

GUTIERREZ: We -- we agree. It's in the bill. I have 102 Democrats who are ready to do it. I'm sure he's ready to do it.

TAPPER: How many Republicans do you have?

GUTIERREZ: Well, none. They don't have -- they don't have a comprehensive proposal. But let me just make -- I think...

TAPPER: But you can't get anything passed if you don't have Republicans for it. In the House you can...

GUTIERREZ: Exactly. Exactly.

TAPPER: ... but in the Senate you can't.

GUTIERREZ: Exactly. So, Jake, here's -- but -- but I think, first, we should see what it is what agree on so then we can figure out the others.

(CROSSTALK)

GUTIERREZ: And -- and -- no, but, seriously, I think if he wants a Social Security card that -- that...

(CROSSTALK)

TAPPER: Right, that's in the Democratic bill in the Senate.

GUTIERREZ: It's in our Democratic bill, too.

TAPPER: But here's the question, Mr. Bilbray, Congressman Bilbray. I've read a lot of transcripts with you, interviews with you, and I've never heard you say what should happen with the 12 to however many million illegal immigrants are in this country, what should happen to them. You say stop the employing -- the employment of them...

BILBRAY: Right.

TAPPER: ... but you don't say, do we deport them? Do we make them temporary guest visa workers? What happens to these people?

BILBRAY: Jake, the first thing you do is pass the two Democratic bills the Republicans agree on, the Heath Shuler bill, where you have 230 people support it, Republicans and Democrats. Then you have Silvestre Reyes' bill, which has Republican -- we could pass that tomorrow if Speaker Pelosi allowed it to be done.

First you do is stop paying them to be here. Then what you do is you give enforcement the chance. You have not had interior enforcement.

When we talk about this, again, the 40 percent, don't hire 80 percent Border Patrol agents and 20 percent ICE. Ask the Border Patrol association. They would prefer to have ICE agents enforcing the employment. What you do with the people once you -- once you have done enforcement, you can do a true guest worker program where people come here legally and go home, but you do not create a special status for those illegally in the country and expect the rest of the world to follow our rules, if we announce that if you want to come to America you break the law...

TAPPER: So you don't have a problem with the idea, if these individuals -- the however many million, 12 million -- have to go back to their home countries, right, have to re-apply, have a temporary guest worker program, get in the back of the line, fine -- fine, learn English, that's OK with you?

BILBRAY: No, no, no. You had to say back of the line. The fact is, you've got to clarify. As long as we offer the same proposal to those who are waiting patiently to immigrate legally, as we're going to offer those who are illegally here -- because once you send the message that we're going to reward and create a special status for those who are illegally here, you will not be able to build a fence tall enough.

TAPPER: Congressman Gutierrez, let -- let me ask you a question. Isn't Arizona's inclination to take matters into its own hands understandable, given the failure of the federal government to deal with this?

GUTIERREZ: Yes. It is understandable. The federal government has not exercised its preeminent role, its constitutional role in enforcing our immigration policy. And I think what President Obama has done is, first, he laid out a speech before the American people in which he says, here's our immigration problem as I see it, and here's my solution as I see it.

And the following week, the Justice Department basically didn't go down to Arizona -- although I can argue with racial profiling and civil rights violations, and I think I can argue them well -- they didn't go down there and make that argument. They just said the federal government is the preeminent authority on immigration policy, and we're taking control.

But now we have to take control. So what Mr. -- Mr. Bilbray basically answered to you is that he thinks this is kind of like Fantasy Island, right, where 12 million people are just going to disappear like a mirage. They're not going to -- they're not going to...

(CROSSTALK)

GUTIERREZ: If I could just finish -- they're not going to disappear. Let me just describe who these 12 million people are. Half of them have children. There are 4 million American citizen children attached to them. Do you know that two-thirds of them have been 10 years or longer, millions of them have been here 20 years?

(CROSSTALK)

TAPPER: We only have a minute left, so I just want to have -- let Congressman Bilbray...

(CROSSTALK)

BILBRAY: ... what they are. The fact is, is you've got 15 percent work in the construction trades. You've got 14 million unemployed Americans and legal residents. The fact is, what are you going to do with the next 20 million illegal? Because you've announced a policy -- is it going to be a policy that we're going to give amnesty every year?

And my question is this, is like you said. We would support if they were at the back of the line, but why can't we do the enforcement? Why can't we give enforcement a chance?

The Obama administration is saying now -- they're doing now that when they bust an employer, they just -- they just let loose the illegals on the assumption that the illegals will deport themselves. Even the Obama administration is recognizing, once employment is...

GUTIERREZ: They will not leave. There are 12 million. Listen to that 7-year-old girl who asked the first lady.

BILBRAY: Ask...

GUTIERREZ: Can I just finish? Listen to that 7-year-old...

(CROSSTALK)

BILBRAY: ... how do you know they won't leave?

GUTIERREZ: Answer the question of that American citizen innocent child. There are 4 million like her. There are 12 million other. There are families. They have deep roots in our country. And we should find a way -- here's what I want to do with them.

TAPPER: You know what?

(CROSSTALK)

GUTIERREZ: I want to bring them into the federal government, register them, have them learn English, pay taxes, and be good with the law.

BILBRAY: Look, Arizona -- Arizona is about the fact the federal government hasn't given enforcement a chance.

GUTIERREZ: I'm ready to do -- listen to this program. I am ready to give...

(CROSSTALK)

BILBRAY: Then pass the Shuler bill. Pass the Silvestre Reyes bill, and we've...

(CROSSTALK)

TAPPER: OK. I have to -- you know what? I have to leave it right there. Not surprisingly, we didn't settle upon a common ground bill. But, Congressman Gutierrez, Congressman Bilbray...

GUTIERREZ: Thank you, Jake.

TAPPER: ... thanks so much for joining us. We really appreciate your time.

TAPPER: Yes, so that was the LeBron-a-thon from earlier this week. It's one of the many topics we will discuss on our roundtable with George Will, Ron Brownstein of National Journal, Reihan Salam of National Review, and the Washington Post's Ruth Marcus.

I want to start with President Obama out on the campaign trail again this week trying to sharpen his message. Here's a glimpse.

(BEGIN VIDEO CLIP)

OBAMA: They're not coming back and saying, "You know what? We really screwed up, but we've learned our lesson, and now we've got this new approach, and this is how things are going to turn out really well." That's not their argument. They are trying to sell you the same stuff that they've been peddling. They are peddling that same snake oil that they've been peddling now for years.

(END VIDEO CLIP)

TAPPER: So the president, George, is trying to make this not a referendum on him, but rather a choice between him and Republicans. Is it going to work?

WILL: No, because he is an expert on snake oil. This is the man who said, if we pass the $767 billion stimulus bill, which it turns out costs $862 billion, a $95 million oops, we would have unemployment at 8 percent and no higher, and it went higher.

This is the man who, in another form of snake oil, said we have this wonderful idea of homeowner tax credits for buying first-time homeowners, which we now realize has largely subsidized home purchases that would have been made anyway.

This is the man who last week was out saying, "I'm going to give $2 billion, about $2 billion, to two companies to create about 1,600 jobs." That's $1.5 million per job. That is snake oil.

TAPPER: Ron, you were just in the Denver suburbs talking to voters. What's their take?

BROWNSTEIN: Well, look, it is, as George says, the aspiration of every president who presides over tough times to frame the midterm as a choice, not a referendum, and it's an especially attractive idea now, because as you can see when you go out and talk to voters, the decline in esteem of Democrats has not been matched by a rise in appreciation of Republicans.

But, in fact, it is very difficult to change the frame of the election that way. The tendency of voters is to view the midterm primarily as a referendum.

Two statistics worth noting. In 2006, when Democrats took back the House, if you looked at the national exit polls on the House races, 84 percent of the voters who approved of George W. Bush voted for Republican House candidates; 82 percent of the voters who disapproved of Bush voted for Democrats.

In '94, when the Republicans took the House and the Senate, 82 percent of the voters who approved of Bill Clinton voted for the Democrats; 83 percent of those who disapproved voted for the Republicans. There is that strong tendency.

And when I was out talking to voters, it was clear that it is Obama who was front and center, not the Republicans, and what he is facing is an opposition that is more energized and ardent than his supporters.

And doubts even among some of those -- I thought the thing that was most striking to me, in talking to voters, was even those who felt that the TARP was necessary, that it prevented us from falling off the cliff into another depression were still enormously offended by the idea of bankers getting this kind of assistance without paying a more direct consequence.

TAPPER: Reihan, are we facing a wave here? Are Republicans going to take over the House and maybe even the Senate, do you think?

SALAM: I think we are, but I also think it's kind of a gimmie. Republicans aren't performing nearly as well as they ought to be. Consider the folks who've been hit hardest by the recession. It's younger voters. It's African-Americans. And these are constituencies that are not giving Republicans a second look.

But another thing is, there was a tremendous vulnerability among those college-educated, upper-middle-class white voters who turned to Obama in droves. And there was some indication that maybe they were tilting towards the Republicans, and they're not in big numbers.

And that is the real opportunity, because those working-class, blue-collar whites that Ron writes about, they have tilted Republican for a long time. The real opportunity was in those big-city suburbs, and they don't seem to be moving as quickly as they ought to be for Republicans to have a real lasting, effective impact, the kind of thing that would tell you that in 2012 they might have a real shot at taking back the White House. So I think that it's a problem.

TAPPER: Ruth, does -- we'll get to you in a second, Ron -- Ruth, what's your take? Is the president doing the right thing here? Is this -- is this the effective message to help at least lower the losses in November?

MARCUS: Well, that presumes there's any effective message. And the president says, look, these guys drove the car into the ditch. Why would you give the keys back to them? The only problem with that is, who's been driving the car for the last 18 months and where are we?

And I agree with George in the sense that I don't think this message is going to -- it may tamp things down and make people think a little bit, but the reality is, one side is energized, the other side isn't energized.

I disagree that it's snake oil. I actually think the administration -- I wouldn't stand by every single thing they've done, but they did what they could do to get the economy back on track. It just hasn't happened quickly enough, and they are paying the inevitable price for that.

TAPPER: Ron?

BROWNSTEIN: They have a case to make on that front, but I think the challenge they have -- Reihan, I think, was -- was alluding to it. Blue-collar America is really hurting, and it had been trending Republican even before this downturn. It is very hard to imagine any of that turning around between now and November.

If there was an opportunity -- if there is an opportunity for Democrats to avoid a true debacle, it is probably in those upper-middle-class suburbs. Two points: There's a sharp gender divide. College-educated white-collar women, white women with college degrees, are open to Obama. They are his strongest group in the white electorate, and they're pretty evenly divided on the election.

College-educated white men are -- tend to be more ideologically suspicious of government, and they could break very sharply toward the Republicans.

The other point, though, is that the Dow is a big indicator of economic health in these kind of white-collar suburbs. And -- and the fall in the Dow, the correction really, I think, has soured some of these voters on the economy.

But what the administration wanted was a narrative that said, look, we have been through the dark valley, things are beginning to turn up, and do you want to go back? Without that predicate, the "do you want to go back" message loses a lot of its sting.

TAPPER: But, George, we are in the middle of something of a recovery, are we not? Does he not have a case to make?

WILL: No, because the general...

MARCUS: You're surprised by that answer?

WILL: ... the general American experience is that the sharper and more abrupt the downturn, the sharper and more abrupt the upturn, the V-shaped recovery. This is looking dangerously like an L-shaped recovery, in terms of what really interests people, which is job-creation.

An -- an economist has made the following analogy that I think Americans understand. If I pay my neighbor $1,000 to dig a hole in my backyard and fill it up again and he pays me $1,000 to dig a hole in his backyard and fill it up again, according to the national income statistics, that's a $2,000 increment to GDP and two jobs have been created. The American people understand, however, there's no real wealth created in this kind of transfer payment.

MARCUS: George makes a really important point about the shape of the recovery, because the reality is that it takes a while for voters to get that the economy is getting better, if it is getting better. And the fact that the economy is where it is now is pretty much where they're going to vote in November. If -- if suddenly the economy started to grow robustly, there just isn't enough time for the perception to catch up with the reality.

TAPPER: Reihan, every single time a Republican member of Congress or even a Republican candidate makes a gaffe, whether it's John Boehner or Joe Barton or Sharron Angle, the White House pounces on it like a piece of meat. Does it have any effect? Is it getting -- is the message getting out there that, hey, if you give the Republicans control of Congress, Joe Barton, who apologized to BP, is going to be head of the Energy Committee? Is that having any resonance at all?

SALAM: I think it does have an effect in a narrow way. The White House has a huge problem with the Democratic base. There are folks who are outside of that core African-American constituency, core liberal constituency who are wondering.

The president says things like, "Well, we should have a bigger stimulus, but we can't get it politically, so there you go." They want to see him actually affirmatively make the case for it. Put your money where your mouth is. If you really believe that these more liberal, more aggressive solutions are going to work, then make the actual case.

So then by playing this kind of partisan game, you know, heightening the partisan conflict, you're actually keeping your people on side in that kind of a way without actually delivering on the policies, the bold policies that a lot of folks on the left expected.

TAPPER: And speaking of bold policies, Israeli Prime Minister Benjamin Netanyahu was at the White House this week. George, you were -- were not with us last Sunday, an anomaly, because you were in Israel and you met with Netanyahu.

You -- you saw the meeting on Tuesday from Israel. Was anything accomplished?

WILL: No, and here's why: 19 years ago, 1991, in Madrid, direct talks between Palestinians and Israelis, big breakthrough. You know what we're trying to get 19 years later? Direct talks between the Palestinians and the Israelis.

The Palestinians are holding out hoping that American pressure will be put on Israel to make concessions that they should be trying to get at the negotiating table, which makes me think that, once again, the peace process itself is the biggest impediment to peace.

We're constantly lecturing the Israelis, for whom getting up in the morning and getting on a bus can be a risk, that they ought to take a risk for peace. The Israelis say, we withdrew from Gaza. What did it get us? Hamas took over. We now have a terrorist state in Gaza armed with all kinds of rockets. We withdrew from southern Lebanon. Now we have Hezbollah dominating that with 65,000 short-range rockets and now scuds coming from Syria that can hit Jerusalem and Tel Aviv.

Now the question is, what do you do with the West Bank? What has changed in 19 years are certain facts on the ground, facts that you can see by literally driving around Jerusalem, enormous set of new flourishing suburban areas that no conceivable Israeli government is going to hand over that territory to any Palestinian state.

TAPPER: Ruth, there was a lot of pageantry this week with President Obama -- the last time Netanyahu was here, there was not even a photograph released or a photograph permitted by the press corps. This time, the press corps was allowed inside the Oval Office. There was this long extended handshake. President Obama walked Netanyahu to his car, told him, "Be well."

MARCUS: I think he fluffed some pillows.

TAPPER: Almost. There was -- it was very demonstrative. But what's the substance here, beyond this reaffirmation of friendship?

MARCUS: Well, the reaffirmation of friendship is itself important. What we saw on Tuesday was a recognition by both the Israelis and the United States that this is a relationship that's too big to fail. It is not in anybody's interest to have the kind of bickering, hostility, dissing, whatever, that we have seen at various points earlier on in this administration. It was not working for either side.

So we have a little bit of a reset going on here. And that is important because it sets the stage for a much better handled Mideast policy from the point of view from the Obama administration, which I think has been very good cop, bad cop, good cop, bad cop, and it's been the same cop, which has been President Obama, to try to set the stage for progress going forward.

Will there be progress? George's history suggests how difficult that is. We'll, you know, see you in September on that. That's when the moratorium expires. We'll see if there's a movement towards direct talks. We'll see if there's an extension of the moratorium.

TAPPER: And in the next...

MARCUS: But we -- we needed this pageantry to get to the possibility of substance.

TAPPER: And we're told in the next two months there will be an announcement about direct talks. Do you -- are you optimistic, Ron?

BROWNSTEIN: Well, I mean, I think that you have to separate the process for the policy. I mean, look, it is -- it is the fate of Democratic presidents and Bibi Netanyahu to be linked to each other in this kind of mismatch and an Israeli government that probably is more comfortable with the point of view of a Republican conservative government.

The White House feels that they have made progress in sort of imposing or advancing their view of how Israel achieves security on Netanyahu in the sense that he has moved on the process and is more likely to accept direct talks. But his -- whether his view of the ultimate value of those talks and whether what he is willing to give up or negotiate during those talks has really changed much, I think there's reason to be much more skeptical of that.

In the end, it's hard to believe that the Obama view of what Israel needs to do to advance its security and the Netanyahu view of what Israel needs to do to advance its security are really ever going to truly converge.

SALAM: I think that there's the bigger, deeper issue, and George alludes to this, which is that it's not clear who the Palestinian negotiating partner is, and the United States can exert as much as pressure as it wants, but, you know, as long as that's not the case -- and that's a process that has to be worked out and is only going to be worked out among the Palestinians.

As far as the president goes, I think the -- you know, the Democratic foreign policy establishment really believes that the peace process or at least the projection that the United States intends to do something about the peace process is vitally important for achieving goals elsewhere in the Islamic world, and that means that it's just talk, talk, talk and nothing else.

TAPPER: There was an interesting political development this week here domestically in the United States with former vice presidential nominee Sarah Palin rearing her head and releasing this Web video for her PAC.

(BEGIN VIDEO CLIP)

PALIN: Moms kind of just know when something's wrong. There in Alaska, I always think of the mama grizzly bears that rise up on their hind legs when somebody's coming to attack their cubs, to do something adverse toward their cubs. If you thought pit bulls were tough, well, you don't want to mess with the mama grizzlies.

(END VIDEO CLIP)

TAPPER: So, Ruth, you're the actual only mama grizzly at the table. What's your take on this?

BROWNSTEIN: Rear. Rear for us.

MARCUS: Well, yes, I think I'll withhold my rearing, unless there's an adverse event towards one of my cubs.

BROWNSTEIN: Yes.

MARCUS: I -- there's been a lot of talk about this video as signaling a kind of new, kinder, gentler Sarah Palin, trying to broaden her appeal beyond the kind of Tea Party base. I don't get it. I think it's the same, old, vapid, platitudinous Sarah Palin, not to put too fine a point on it.

There is not a shred, not a shred of substance in this ad. What are the adverse events and what do you intend to do about them?

TAPPER: Reihan's shaking his head. You liked it.

SALAM: I thought it was an outstanding ad, very impressive, and I've got to say, quite a lot of issue -- non-issue issue ads from the Obama campaign during the 2008 that proved very successful. Basically, Republicans have a problem.

TAPPER: Yes, we can.

MARCUS: "We're for vapidity."

SALAM: They have a problem. They have a problem, which is the gender problem. They have a huge problem with connecting with upper-middle-class women. And, you know, Sarah Palin might not be able to do that, but working-class women are huge. They're very important. Get them out there. Get them energized. Get them active.

And if you look at Hillary Clinton circa this time in the cycle, she had very high negatives. And I don't think that issue ads were going to help her with those high negatives. Similarly, Sarah Palin has sky-high negatives. So I think that that's something she has to manage, something she has to work on, and this is a kind of plucky Sarah Palin that I think really appeals to people, that's not as hard-edged, not as polarizing, and I think that it was really impressive, far more impressive than anything I've seen from her in a long time.

BROWNSTEIN: You know, Sarah Palin as a political figure is much more of a cultural statement than she is a policy agenda, and she really does divide the electorate along cultural lines. If there is an audience for Sarah Palin, as Reihan suggests, it is a blue-collar female audience, which does relate to her in some ways, but she is an enormously polarizing figure with a real low ceiling.

If she runs in 2012, I believe you would see the Republican Party divide along the same class and cultural lines that the Democrats did in '08 between Hillary Clinton and Barack Obama.

TAPPER: But, quickly, are mama grizzlies, as she predicts, going to be a force this November?

BROWNSTEIN: I know about the lower 48, how many grizzlies there are. But yes. Yes. You know, blue-collar -- if she is referring there to culturally conservative, working-class white women, they have moved away from the Democrats pretty sharply under Obama. There's a lot more erosion there than there is the upper-middle-class, where he's still pretty strong.

So in that sense, she is speaking to a constituency. Whether she is the voice that you want to ultimately be defining your party, that's another question.

TAPPER: George?

WILL: She's trying to get -- flatter people by telling them -- they may be grandmothers -- but telling them they're grizzly bears, and it makes them feel good.

On the vapidness meter, that ranks nowhere near, "We are the ones we have been waiting for," which was Obama's way of flattering the self-esteem of his supporters.

TAPPER: All right. We have only a little bit of time, but obviously there was a big move in the sports world this week, with LeBron James moving from Cleveland to Miami. I want to do a quick whip-around on this.

George, should we feel sorry for Cleveland?

WILL: No, we -- well, yes, we should feel sorry for any city whose identity is bound up and who thinks its economy is bound up with one athlete.

TAPPER: Ron, what did LeBron do to his image this week?

BROWNSTEIN: I think he will be the Alex Rodriguez of basketball. He has gone from phenom to mercenary, and he will never go back on that continuum.

TAPPER: What's -- I always read your stuff to find out what I'm missing, what I'm not thinking about with -- with the narrative. What am I missing in the story? What are we not paying enough attention to?

SALAM: I think LeBron is a really impressive, bright kid who got in over his head. I think he didn't go for the most money. He didn't go for the highest profile. He did -- he wanted to play with friends, and he wanted to win some games, and I think it makes a lot of sense.

And I think that he was handled very poorly by his young team of handlers. And I think that that's the tragedy. It is going to do great grievous damage to his reputation, and it's totally unfair, because he did something pretty impressive and mature.

TAPPER: Give voice to the people of Cleveland who are hurting this morning. You wish he stayed?

MARCUS: I wish he stayed. I saw somebody from Cleveland saying, "We're from Cleveland. We're used to losing." And my heart really went out to them -- to them. I understand he wanted to go play with his friends. It would have been nice if he stuck around. You wouldn't have to put a little "dis" in front of the "loyalty" tattoo he's got on his chest.

And, also, it's not just -- it was the self-involved nature of the decision that really just turned me off.

TAPPER: A reminder that later today on ABC News, the World Cup final, if you're interested in athletics, and our roundtablers will give their picks in the world table -- in the World Cup in the green room at abcnews.com, where later you can also find our fact checks courtesy of PolitiFact.

Coming up here, the Sunday funnies.

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