'This Week' Transcript: Crisis in the Classroom

GHARIB: Go ahead. I mean, the situation is difficult right now, but he's saying that we'll prop up if the situation gets really worse. The real question is, does he have the tools to do what it takes? And this week, Alan Blinder, who used to work at the Fed, put a piece in the Wall Street Journal where he was saying the Fed is running low on ammunition, and the ammunition that it does have is the weak stuff.

I mean, he's saying that at the height of the financial crisis, the Fed was using things like machine guns and hand grenades, and now they're fighting with swords...

AMANPOUR: And throwing rocks.

GHARIB: ... and throwing rocks. And, you know, even -- even the Fed is -- Bernanke is saying that, you know, there are options, but, you know, don't count on us, the Fed alone, the central bankers, to solve the world's problems. It seems like he was hinting at maybe ultimately Washington is going to have to step in.

HAASS: It's exactly right. The Fed has essentially played its hand. Interest rates are as low as essentially they can go. So we can't look to the Fed to get us out of this.

I also don't think, by the way, we can look to stimulus to get us out of this. We've had one. It didn't have the effect people wanted. Plus, at a time of budget deficits, I don't think we're ever going to get a stimulus that's going to be large and focused enough that's going to make a difference.

Instead, we actually have to return to first principles. Why can't we have a gradual reduction in our budget deficit? Why can't we have a more predictable economy about regulation, about taxation? Why can't trade reform and open trade come back on the agenda?

We actually need some policies of growth. Business is sitting on an enormous hoard of money. Businesses are not spending. We need to create an economic and political environment where American business will spend and start to hire again.

BRAZILE: Yet Congress is divided. They are afraid to put more money back into the system, although most Americans should know by now that the stimulus did create or save 2 million to 4 million jobs, averted the Great Depression 2.0, but Congress doesn't have the appetite to put more money into the system, so the Fed may have to step in.

There may be more tools in their arsenal that they can use to try to stimulate this economy, but 45 percent of those who've been unemployed, they've been unemployed for six months or longer. They desperately need the skills and the tools to get back into the workplace.

AMANPOUR: Which goes back to our education debate, which we had at the beginning of this program.

GHARIB: And I think Richard makes a very good point, because right now the debate is, you have to go beyond the conventional cures of Fed policy and also these piecemeal stimulus measures. And this week in the Washington Post, Mohamed El-Erian, a noted economist, wrote a piece saying, you know, we've got to start thinking out of the box. Maybe structural changes that have to be made, more pro-growth tax reform, back to your education case, more support for education, job retraining, things like that.

So I think the debate is moving more in that direction. What are the structural measures that we have to take?

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