'This Week' Transcript: Economic Panel

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(BEGIN VIDEO CLIP)

AMANPOUR (voice-over): Good morning. I'm Christiane Amanpour. And at the top of the news this week, trouble on the road to recovery. Jobless claims are up.

(UNKNOWN): The numbers are dismal for employment.

AMANPOUR: And Wall Street gets nervous. How worried should we be? And what will bring confidence back? This morning, top voices on the economy: former New Jersey Governor and Wall Street CEO Jon Corzine; Republican Senator Bob Corker of the Senate Banking Committee; Obama economic adviser Laura Tyson; and chief economist at the U.S. Chamber of

VIDEO: A Look at the Economy
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Commerce, Martin Regalia.

Then, washed away. Twenty million Pakistanis in danger, as the worst flooding in memory leaves huge areas of the country under water. It's a race against time to bring relief. "This Week" has the latest from inside the crisis, with U.S. efforts to deliver aid.

Plus this week, the president weighs in, defending the mosque and Islamic center near Ground Zero.

OBAMA: Muslims have a right to practice their religion, as everyone else in this country.

AMANPOUR: Or does he?

VIDEO: A Look at the Economy
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OBAMA: I will not comment on the wisdom of making a decision to put a mosque there.

AMANPOUR: That and all the week's news and politics on our roundtable, with Cokie Roberts, political strategist Matthew Dowd, David Ignatius of the Washington Post, and Chrystia Freeland of Thomson Reuters.

And the Sunday funnies.

LENO: Unemployment among teenagers at an all-time high, all around the world. It's not just here. In fact, in China, it is so bad, kids as old as seven are having to move back in with their parents.

(END VIDEO CLIP)

ANNOUNCER: From all across our world to the heart of our nation's capital, ABC "This Week" with Christiane Amanpour starts now.

AMANPOUR: Good morning. This was supposed to be the summer of recovery, but the effects of the so-called Great Recession continue to cloud this nation and much of the world. The number of U.S. workers seeking unemployment benefits rose unexpectedly to 484,000. It's the worst in almost six months. And in the housing sector, banks foreclosed on more than 90,000 properties in July, the second-highest total since the crisis began.

And these pictures speak to the desperation this week in Atlanta. Thirty thousand people waited for hours in sweltering heat to apply for 655 available spots of government-subsidized housing.

And I'm joined by four top voices on the economy. From Berkeley, California, member of the president's Economic Recovery Advisory Board Laura Tyson. From Chattanooga, Tennessee, Republican Senator Bob Corker of the Banking Committee. In New York, the former New Jersey governor and CEO of MF Global, Jon Corzine. And joining us here in Washington, chief economist for the U.S. Chamber of Commerce, Martin Regalia.

Thank you all for joining me. You've heard the figures. You've read about the figures. You can also probably palpably feel the concern and worry amongst the American people. And I want to read you something that was written about this joblessness, about the younger generation in the Atlantic recently. Look at what was written about unemployment.

"There is unemployment -- a brief and relatively routine transitional state that results from the rise and fall of companies in any economy, and there is unemployment -- chronic, all-consuming. The former is a necessary lubricant in any engine of economic growth. The latter is a pestilence that slowly eats away at people, families, and, if it spreads widely enough, the fabric of society. Indeed, history suggests that this is perhaps society's most noxious ill."

Let me turn to you right now, Martin Regalia. Do you agree with that? And do you think that that's what this country is in right now?

REGALIA: Well, I agree with it, and I think that is what we're seeing right now. We're seeing an economy that is growing, but growing in a very lackluster way. It's not generating enough demand, and therefore it's not generating enough jobs.

And on top of that, the last three or four recessions have given rise to longer terms of unemployment. More retooling is necessary to bring the displaced workers back into the workforce, and that retooling is taking a lot longer.

AMANPOUR: Let me turn to you, Laura Tyson. You're an adviser to the president right now. A recent Wall Street Journal poll of some 53 economists say they don't see the employment rate coming down below 9 percent, you know, at least until June 2011. What can be done about this?

TYSON: Well, I think that we have to do a number of things. I think we have to worry, first of all, about taking care of the people who are unemployed. And that's why I really have supported the extension of unemployment benefits and the extension of benefits to help people maintain their health insurance if they lose their job, very, very important. You have to deal with the reality that people are long-term unemployed, 7 million people long-term unemployed.

Secondly, we have to continue to do everything we can to stimulate demand in the economy. Let me give you two examples. We do have a payroll tax credit that has been offered to companies that bring on new unemployed workers into the workforce. I think we should continue that.

I think we should continue to look at major spending on infrastructure projects. You know, the good news here about the stimulus, it's said, well, the infrastructure projects haven't come on board yet. They're coming on board now, and they have high job-per-dollar-spent outcomes.

AMANPOUR: All right.

TYSON: And then, finally, we have to worry about the longer-run problem of this structural employment, because I'm going to point out one thing for this discussion. The unemployment problem is primarily a problem for people who have a high school -- who don't have a high school education or just have a high school education.

Unemployment for those with college educations is now 4.5 percent. Unemployment for those with more than a college education, below 4 percent. We have a problem of education in this country, and we have to educate more of our young people fully through college education. Let's take this as an opportunity to do that.

AMANPOUR: Let me ask Senator Corker on the Banking Committee -- and you've spoken quite a lot about this -- you are in Chattanooga right now, and you told me that you have been out in the rural areas, where there's really nothing for people out there.

You know, beyond -- beyond the current unemployment rate, there's also underemployment, and it's standing at about 16.5 percent, the total problem of people who either don't have a job or who don't have enough of a job to make ends meet. How is it -- is it impacting the people in the rural areas? And do you think that this really goes to the heart of the American dream that is being deferred?

CORKER: Well, you know, as we speak, the city that I'm sitting in has been named one of the -- is named the top economic producer over the next decade, and it's because of investment in the workforce. It's a vision. It's the fact that we really have held on to trying to produce things.

As you go to the rural areas, with the lack of infrastructure that exists in most rural areas around our country, there's lesser opportunity for that. And so it does create challenges that don't exist in some of the major metropolitan areas, and I think we're seeing that more and more across our country.

At the same time, I think much of what we've done over this last year is create an air of unpredictability. And what's happening is businesses are sitting on the sideline. They don't know exactly what the lay of the land is. And I think the best thing we can do in Washington at this time is really just to calm down and quit changing sweeping -- making sweeping changes.

I sat down with a business this week -- I'll give you an example -- and they're looking at the health care bill, and they're trying to decide, should they keep people under 30 hours? Smaller businesses are saying, should we stay under 25?

So I think that much of what we've done over this last year has actually been counterproductive. And, again, the best thing we can do is just calm down, to really let people's balance sheets sort of get back where they need to be. That will stimulate demand over time, as families and people -- households across our country get their balance sheets in order.

AMANPOUR: Well, we'll come back to that. You know, the Financial Times has basically said that Congress needs to, quote, "get a grip." I'm going to ask you about that right after I go to Governor Corzine and ask him about what is going to stimulate the kind of consumer confidence that you were just talking about, Senator -- Senator Corker.

Look, there are figures, Governor Corzine, that suggest that non-financial companies have socked away something like $1.84 trillion in cash and other assets, but they're not spending them, they're not hiring, they're not building plants and other infrastructure. Why not? And wouldn't -- don't they have a responsibility to do so in this situation?

CORZINE: Well, there is a gap of confidence in the economy that comes from the shock that we had of 2008 and 2009; $17 trillion worth of lost economic value in that timeframe makes companies and people very, very concerned. Even though we've had a major recovery in some of that valuation loss, it makes people nervous.

We also -- and I think your quote that you started with actually frames what is the real problem. We have both a recession problem that was the result of the great financial crisis, but we also have this great transformation that's taking place across the globe. A lot of other countries are very competitive with the United States today, and we need to invest in our education system, in our infrastructure system, in our efforts to expand our exports, if we're going to be competitive as we go forward.

AMANPOUR: OK, well, let me ask -- let me ask about that, because when it comes to exports in manufacturing, we read quite a lot that America has been losing its competitive edge to places like China and -- and -- and other such. Laura, what do you think the United States can do to regenerate a competitive export in manufacturing?

TYSON: Well, I think the key word Jon raised is investment. And I think it is absolutely essential. You know, we get caught up in discussions of deficit reduction or stimulus. Let's forget those issues for a minute and just think about investment.

And here it is investment in a number of things. I've heard Senator Corker talk about the importance of infrastructure. For years going into the Great Recession, it has been noted that the U.S. has been investing inadequately in its infrastructure, maybe to the tune of $200 billion a year of economically justifiable investment infrastructures we're not doing.

Let me turn to investment in education. It is the case -- we used to be number one in the world in college graduation rates. We are now number 14, number 15. We're leading the world in high school dropout rates. And as I said, the unemployment problem is most severe in dropouts.

So invest in people. Invest in infrastructure. Invest in knowledge. You know, we basically are trying to get the research and development spending in this country up to 3 percent so we can again be leaders in the world in that. Invest, invest, invest is really what we must do.

Public-private partnerships, you know, with that, $100 billion of the stimulus package is levered to private spending. A dollar spent by the public sector on infrastructure can bring three dollars of private spending.

AMANPOUR: So, Martin Regalia, why isn't the private sector investing, investing, investing?

REGALIA: Well, I think, you know, our tax laws and our other regulatory structure in Washington don't foster that. We tax savings multiple times. We don't allow full cost recovery. We don't allow expensing on investment. We can't even pass an R&D credit extension that's been delayed for over a year through a Congress that's fighting with each other.

And when you don't have the kind of laws and the kind of tax structure that facilitate and encourage investment, you get a lot less of it. We tax our multinational corporations on their overseas profit. We're the only major trading country in the OECD that still does that, that doesn't have a territorially tax system.

And so what do we do? We tell our people, go out and export, and then we tell them, we're going to tax you more than every other people you have to compete with in the global economy.

AMANPOUR: Senator Corker, what about that? We were talking about Congress, and you just heard Mr. Regalia talking about Congress fighting with each other and not getting these things done. What do you think can be done? You said chill out, calm down, perhaps until after the election. What can be done to fix this, do you think, in a bipartisan way?

CORKER: Well, I think one of the things we need to do -- I've heard Laura talking about investment -- is as a country, we need to decide, how much should the federal government spend? On average, it's been 20.3 percent over the last 50 years. I heard Erskine Bowles the other day say 21 percent. But I think much of our debate goes to little issues that really divide our country, but that needs to be the first issue. How much should the federal government take in from the private sector?

Once that decision is made -- I might say 18 percent. Erskine may say 21 percent. Maybe the right number is someplace in between. But after that decision is made, what is the appropriate tax policy to generate economic growth?

And I think that some comments have been made about our lack of -- the way we tax. We do tax investment. We encourage people to go into debt. I think our tax policy in this country certainly needs to be looked at, and it needs to be looked at in a way to encourage investment, to encourage growth.

Obviously, if our gross domestic product grows, then the whole issue of debt diminishes, the kind of things that Laura's talking about are more able to be done. So I think we -- we need to move to that big picture first, look at what's appropriate. I think most people in America would rather determine what to do with their own money versus let 535 people decide for them.

But the fact is that -- that we get mired down in these little issues that divide us when really we ought to focus as a country on this bigger issue first.

AMANPOUR: So let me go to you, Governor Corzine. You lost an election -- re-election in your state when you were governor. When you took office, unemployment was at 4.7 percent. When you left, it was 9.9 percent. Is that why you lost? And you've talked about how it was painful, but in 20/20 hindsight, what could you have learnt from that, do you think?

CORZINE: Well, I think that any time the economy is weak, incumbents are going to have challenging re-election on most instances, and that certainly was the case when you have unemployment rise that much. We were in the midst of the financial meltdown and the aftershocks of that in 2009. I think we'll see some of that this fall.

But I want to go back to, we have been successful in this country in driving investment with higher tax rates than what we have today. I think the issue about setting those and making sure that the expiring tax cuts that are actually on the table at the end of this year, that needs to get addressed, and it needs to get addressed relatively quickly, because that does create uncertainty while that is yet to be resolved.

I would hope that the Congress and the president would either say, "We're going to get to a conclusion about the long term," or, "We're going to extend this for a year and we'll come back and debate this at another point in time," because that's a major uncertainty overhanging the economy.

AMANPOUR: Let me...

CORZINE: In the long run, though, we overemphasize taxes relative to the general confidence and the well-being of our middle class. That comes together, and you'll see it in the elections. If you have that high unemployment rate extending over a period of time, people are going to be mighty unhappy, and they're going to take it out on both Democrats and Republicans.

AMANPOUR: Let me just quickly go to what you've mentioned about being competitive with the rest of the world. The big story out of Europe this weekend is that Germany has shown a stronger-than-expected growth over the last quarter.

Laura, you were saying something about how Germany had -- had taught and trained its workforce to compete in these situations.

TYSON: Right. Well, Germany has had a long-term commitment to manufacturing. And it has a very strong manufacturing base. It has a much larger share of its economy in manufacturing than we do.

A major part of that is (inaudible) serious vocational training and very serious ongoing training for manufacturing workers in Germany. And oftentimes a German firm with German workers will retrain and use technology at home rather than offshore those jobs abroad.

AMANPOUR: All right.

TYSON: And I want to point out, also, that Germany manages to do this with a much higher tax rate than we do. I think there should be corporate tax reform. I agree with what -- a lot of what Senator Corker and Martin Regalia have said, but we need investment.

And I would say, in thinking about the share of government and GDP, something that the senator mentioned, we need to distinguish between investment spending by the government -- whether it's federal, state or local -- and other spending.

AMANPOUR: OK.

TYSON: A dollar spent for infrastructure is different than a dollar spent for current operations of government.

AMANPOUR: All right. We've got about 30 seconds left. I want to know, do you think, Martin Regalia -- and then Senator Corker -- can some confidence be injected into the American consumer anytime soon?

REGALIA: Yes, I think it can. I think one thing that we have to address right away is, what's going to happen at the end of the year with the 2001 and 2003 tax cuts? There ought to be an extension, at least a temporary extension, and that would help to -- to ease both the consumers' fears and the business fears.

AMANPOUR: Senator Corker, 15 seconds.

CORKER: Yes, I agree with that. Let's -- let's leave tax policy as it is. Mark Zandi had a great piece today in the New York Times saying the same. Let's not fiddle any more. Let's leave it -- let's leave things so they're predictable and deal with -- deal with this down the road.

AMANPOUR: Well, we'll see how that plays out ahead of the elections and afterwards. Thank you all for joining us on this important topic.

CORKER: Thank you.

AMANPOUR: And we turn now to Pakistan, a major U.S. ally, where a major humanitarian crisis in its third week. Pakistan's government says the worst flooding in that nation's history has left 20 million people homeless. U.S. military helicopters are providing a lifeline for many there, but the U.N. says that 6 million people are in need of food, water and shelter.

ABC's Jim Sciutto flew into Pakistan's Swat Valley with a U.S. Army relief mission.

(BEGIN VIDEOTAPE)

SCIUTTO (voice-over): From the air, the scale of the disaster is alarming, rivers swollen miles beyond their banks, behind them, a trail of destruction.

(UNKNOWN): I've never seen such a large area receive as much damage as I have seen in Swat.

SCIUTTO: Flying into the hard-hit Swat Valley aboard U.S. Army relief helicopters, we saw every single bridge destroyed, and on the ground, villages now dependent on aid from the air.

In Bahrain, population 40,000, its once waterfront hotels now in the water. It has no power, no clean water, and no roads in or out.

(on-screen): So it's cut on both sides?

(UNKNOWN): Yes, it's gone on both sides.

SCIUTTO: So this is -- this is an island now?

(UNKNOWN): (OFF-MIKE) is an island.

SCIUTTO: These American helicopters are ferrying supplies from bases like this one to villages that are completely cut off. We're seeing rice and flour and other supplies going in. The helicopters are today their only lifeline.

(voice-over): Food, much of it from the U.S., in, refugees out. For the fight crews diverted to relief from combat in Afghanistan, it is a dramatic shift.

(UNKNOWN): I sat down and spoke to all the troops about turning that switch off. But the first time I looked at those children needing help, I was no longer concerned.

SCIUTTO: U.S. and Pakistani relief teams are fighting against the clock. This weekend, the first confirmed cases of cholera, a potentially deadly disease that's the result of the lack of clean drinking water.

For many Pakistanis, the flooding and its aftermath is a gritty reminder of all the ways the government has failed them, a plodding response, a state budget dependent on fallen loans, shoddy infrastructure. Seeking to take advantage of the chaos, the Taliban is delivering help where the government is not, particularly in Swat, which saw the end of a massive anti-militant offensive just weeks ago.

For the U.S., however, one sign of hope. America is deeply unpopular here, but the relief effort is winning hearts and minds. Among them, the mayor of Bahrain, who told me the U.S. is outdoing Pakistan's Muslim allies.

(UNKNOWN): And in this disaster, the Islamic countries give their aid after America.

SCIUTTO (on-screen): Does that surprise you?

(UNKNOWN): Yes, surprise, surprise.

SCIUTTO: A good surprise?

(UNKNOWN): Good surprise, yes.

(END VIDEOTAPE)

SCIUTTO: The first priority of the American relief effort is to help the millions in need, but U.S. officials will say very openly it's also intended to improve America's dismal image here. Sixty-eight percent of Pakistanis view the U.S. negatively, and the sight of those American helicopters a very tangible form of outreach.

And, Christiane, on a lot of that food going in, we've seen them labeled very prominently with American flags.

AMANPOUR: Jim, indeed. Let's just talk a little bit more about that, because you mentioned the disapproval rate because of the drone strikes, because of going after terrorists that kill quite a lot of civilians. How are you noticing that in these areas Americans are actually being received warmly because of this aid?

SCIUTTO: Well, we see them getting hugged. They're getting kisses literally on the ground from these troops and thanks, gratitude for this aid that they're in desperate need of.

That said, nationally, the Pakistani media is not covering the U.S. relief effort very closely. They're focusing -- perhaps not surprisingly -- on the Pakistani relief effort. And in a sign of the sensitivity of simply being associated with the U.S., the U.S. will not identify local Pakistani NGOs that it's giving aid to so it doesn't open up the risk that they're subject -- that they're targeted for terror attacks.

AMANPOUR: And, Jim, very quickly, the Pakistani troops, are they being diverted from fighting the militants?

SCIUTTO: Well, there are 50,000 Pakistani troops involved in this relief effort. Pakistani officials say that none of them have been diverted from the border or from counterterror operations. And U.S. officials that we've spoken to today say they believe those reassurances. And they say, Christiane, that counterterror operations with the Pakistanis are underway as we speak.

AMANPOUR: Jim, thanks so much, from Islamabad.

And in response to my questions on the disaster, you can see comments from U.S. Special Representative to Afghanistan and Pakistan Richard Holbrooke on our Web site at abcnews.com/thisweek.

And coming up next, the president's decision to weigh in on the controversial Islamic center near Ground Zero on our roundtable with Cokie Roberts, Matthew Dowd, David Ignatius, and Chrystia Freeland.

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ABC News "This Week with Christiane Amanpour" Roundtable: Cokie Roberts, Matthew Dowd, David Ignatius, Chrystia Freeland Sunday August 15 2010

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(UNKNOWN): How is that healing, by building a mosque, an in-your-face mosque at Ground Zero?

(UNKNOWN): It's like spraying swastikas all over a Jewish memorial.

BLOOMBERG: We would be untrue to the best part of ourselves and who we are as New Yorkers and Americans if we said no to a mosque in lower Manhattan.

KING: This is such a sensitive issue. This, to me, is such a wrong place to have a mosque such as this.

OBAMA: I believe that Muslims have the right to practice their religion, as everyone else in this country. That includes the right to build a place of worship and a community center on private property in lower Manhattan in accordance with local laws and ordinances.

(END VIDEO CLIP)

AMANPOUR: The president waded into the controversy over the Islamic center near Ground Zero, one of the topics that we'll be discussing this morning in our roundtable, with political strategist Matthew Dowd, Chrystia Freeland of Thomson Reuters, David Ignatius of the Washington Post, and our own Cokie Roberts. George Will is still on vacation.

Thank you all for joining us. You did see that speech by the president on Friday night at the Iftar Ramadan dinner at the White House. Why do you think he said that then?

ROBERTS: I think he said that then because he actually believes that, but the real question is, why that he didn't say the next day something more? Do you want to talk about that?

AMANPOUR: Yes, we do, because we're going to put up some poll numbers and just show everybody what the poll numbers are on this issue. One poll says, when they ask about what people think about the plan to build the mosque, that only 30 percent say it's appropriate and 64 percent say it's wrong, but when they say do the Muslim group have a right to build the mosque, 61 percent say yes and 34 percent say no.

So I guess, is that, do you think, what caused the backtracking? Although those poll numbers were out before the speech on Friday night. Listen to what the president said in the gulf in Florida on Saturday, yesterday.

(BEGIN VIDEO CLIP)

OBAMA: I was not commenting and I will not comment on the wisdom of making a decision to put a mosque there. I was commenting very specifically on the right that people have that dates back to our founding. That's what our country is about.

(END VIDEO CLIP)

ROBERTS: That's really not what he was doing. I mean, if you listen -- as you played the whole first part of what he said -- he said they have a right to build on private property, all of that, and -- granted, he didn't say it's wise to build on private property, but it was very clearly an endorsement. And then to walk back from it is just so silly. He's already taken all the flack for having said it.

DOWD: I think they figured out this is a real political problem they have. And I think they either had a tin ear at the beginning of this and how it was going to come across or they mishandled it totally from the beginning, because if they understood, I think, the public on this, where two-thirds of the public say they have a right but two-thirds of the public say don't do it, he would have given a speech going directly to those points, instead of saying -- one day saying they have the right and the next day saying I didn't necessarily say it was the right thing to do.

I think this is a big problem for the president, because it feeds a broader narrative about him, which is, it's my way or the highway. In many ways, to me, it reminds me of Bush, which is, is, "I don't care where the American public is on this. I'm going to say what I think is the right thing to do."

He did on -- he's done it on immigration in Arizona. He's done it on this. He's done it on health care. I think that's the political problem...

(CROSSTALK)

IGNATIUS: ... problem for him. I thought that the speech Friday night was a model of political courage, in the sense that he said what he believed knowing that it was going to cost him. The White House has stayed out of this issue knowing that it's political poison, and I think the president spoke to it fairly directly. This is America. People have a right to build on property that they own, even if it's going to be a mosque near Ground Zero.

He said -- I was sort of sorry that he was trying to walk it back in these more nuanced comments yesterday.

FREELAND: I totally agree with David. And I think, you know, Matt, too, the point of my way or the highway, another way of talking about that is leadership, conviction, having your beliefs, and not governing according to polls.

And I think if you asked most Americans, what kind of a leader do you want, if you ask people in the world what kind of a leader, you want someone who governs according to conviction.

And I do think this touches on, Christiane, the economic panel that you had earlier. I think that it touches on it in two important ways. This point about private property might seem like a parsing, but it is actually essential.

And I think to have the president -- and we had similar comments from Mike Bloomberg coming out and saying, actually, we believe that the rights of private property are so strong, we are not going to change them because -- because...

(CROSSTALK)

AMANPOUR: But there are two issues, Cokie. Where does this go from now? I mean, where does it actually go? Is this now a line drawn under it?

ROBERTS: No.

AMANPOUR: Is this...

ROBERTS: No, I think that...

(CROSSTALK)

AMANPOUR: ... to get built?

ROBERTS: Well, that's -- that's an issue that I certainly can't answer, but I -- my guess is, eventually it does get built and that it becomes no problem.

But the -- but the political issue will continue, because even though the president's remarks Friday night started a firestorm, I think the backtracking is even worse, because, you know, you can make a case that what he said Friday night is just a matter of fact, it is an American right, but to keep -- to keep saying, well, now I'm not sure about this, and then what tomorrow is like...

(CROSSTALK)

AMANPOUR: ... I just want to ask you, because it does go to the heart of what he's been doing since the beginning of his presidency, reaching out to the -- not just the Muslim world, but to Muslims in general. And he made a very important first interview, where he said the United States could not afford to have yet another generation of Muslims viewing it as the enemy.

So do you think it's wise to have this huge hubbub over it or it should just go forward, this mosque?

DOWD: Well, he would -- the president would like this to sort of just go away and not have a huge hubbub about this. The problem is, is that two-thirds of the country are opposed to him on this. That's a problem for a president of the United States.

I think he is in totally -- he states what's in the Constitution. They have a right to build it. That's not the point in this. That is not the point in this. You have a right for free speech. It doesn't mean that you can go and like yell...

(CROSSTALK)

IGNATIUS: Standing up for free speech for Muslims is -- is a point in this climate.

FREELAND: Where is that not the point?

DOWD: But it -- it -- the point is, is that you have to build consensus on this. Tolerance goes two ways. Tolerance goes two ways. Tolerance is the tolerance to somebody to build on private property what they want, but tolerance also is to recognize what that symbolically says to a whole bunch of people in this country. And if you don't recognize that, you're going to have this kind of furor.

AMANPOUR: Do you think it should go ahead?

DOWD: Do I think it should go ahead? No. I think he should call together the people -- there's many Muslims and many people in the Arab community that are very worried about this happening, actually, that they voiced in there.

I think he or somebody should call together something, put this on hold for a little while, bring together some consensus about what people should do, because right now, it's white hot.

AMANPOUR: But what do you do then? It is white hot -- you're absolutely right -- right now. But what do you do when the actual owners, the people who want to build this are in the moderate stream of Muslims, did go to the White House? You were there when they did, when -- when this gentleman did, condemned 9/11, condemned extremism, condemned terrorism, and now they're faced with this situation?

ROBERTS: Well, there are -- there are ways always of making these situations just less hot. And it is a question of suggesting other places, providing other places. Those kinds of things can always be worked out.

FREELAND: But let's talk a little bit about the rest of the world. You know, I think that actually the president's comments, the comments by Mike Bloomberg are a really important message to the Muslim world. And we're going to be talking about Pakistan later on. For these people, for American leaders to say, in the space of, you know, some political pressure from their voters, to say, actually, we believe sufficiently strongly in diversity, in private property rights for our American citizens, I think that's a great...

(CROSSTALK)

IGNATIUS: ... our strongest -- our strongest suits.

ROBERTS: ... coming back from it is the problem.

IGNATIUS: As the world looks at us, if they see that the United States -- even in -- you know, an issue that hurts -- and Ground Zero hurts -- even on that issue, we still stand up for the freedom of people to dispose of their property as they want, that does count.

When I travel, you travel, Christiane, you know, we hear comments about that America a lot. And I think you shouldn't minimize the benefits of -- of saying to moderate Muslims, "Here you are. This upsets a lot of Americans, but we're"...

(CROSSTALK)

FREELAND: ... if the people you're being tolerant of...

(CROSSTALK)

DOWD: There's two freedoms in conflict here. There's two freedoms in conflict. There's the freedom to build on your private property and then the freedom for people to protest and say this is not what we want.

IGNATIUS: Understood.

DOWD: I think the president obviously has to lead in this country and lead in the world. The problem with this one is he is speaking from a position of weakness, not a position of strength. And so if he does not have consensus...

AMANPOUR: Why do you say that?

DOWD: He is in a total position -- his approval numbers in this country are in the low 40s. He's perceived as not able to handle all the major issues in this country right now. The vast majority of this country right now questions his leadership.

For him to go out on an issue like this that is white hot and then say, "I'm going to say it, and I'm going to lead the rest of the world," while two-thirds of this country is in another place, is a real problem for him.

AMANPOUR: So, clearly, the consensus appears that it should have been arranged, debated, done in a slightly better way between those who wanted to actually build it and the community, whether they're Jewish members of the community, Christians, or other Muslims.

And one of the tragedies seems to me that the actual imam was talking -- and his wife -- to the -- to the people who put up the Jewish community center in New York and was talking about how to have something similar like that. And it seems to have all gone awry.

Let's move on to politics, because this week was also -- and this is (inaudible) was primary week in -- in -- in many states. Some have said a group of sort of -- political playbook said oddball character is coming out of right field. What -- whether you believe or agree with that or not -- do you think is the effect of those who've won in some areas, the Tea Party candidates, those who supported?

DOWD: Well, it's interesting. ABC, I think over the last couple of months, has done a great job of sort of gauging the frustration that exists in this country, and it's high as it was in 1992, as high as it's been in 2008. It's not just limited to Republicans. It's independents and some Democrats in this.

I think these primaries have shown that there are some places where it's real anger that's related to frustration and then it's other places which a majority (ph) which is related to frustration.

I think the Republican Party right now, it is the comparison between a bonfire there and a campfire in the Democratic primary. So you can handle the campfire, but the bonfire, which is what helped elect Tea Party people and what's gone on across just headed into November.

I think this is perilous for both parties, actually. I think it's perilous for the Republicans if they become the Tea Party folks, which are sort of out of the mainstream and are going to have a hard time winning November elections, but it's also perilous, I think, for the Democrats if they ignore this level of frustration and they don't deal with it.

ROBERTS: That's right. They -- now, they've had plenty of time to learn about it, and they've had town meetings and heard about it and all that, so they're not going to be taken by surprise. But they think that they can just go back to the old playbook, so they're pulling out Social Security, and they're running against George Bush, and they're doing things that have worked for them in the past that I'm not at all sure will work for them this year, and that could be a real problem, because they're not understanding the level of frustration.

IGNATIUS: The Democrats sound this year with this president like the party of the establishment. And we have a political firestorm out in the country. People are really angry. They're angry at Washington. They're angry about the economy. The Tea Party is an expression of that, but what Robert Gibbs, the president's press secretary, was calling the professional left is another example of that, people who just are angry at the mainstream, centrist views the president often has been espousing.

And I think that's a real problem for them. They don't have the energy. They're not tapping into this energy source as they head towards the elections.

FREELAND: Well, doesn't it just all come down to the economy?

ROBERTS: Well, sure. Sure.

FREELAND: I mean, you know, I don't want to be too simplistic, but with unemployment at nearly 10 percent, I thought the comments that Jon Corzine made earlier were right on, that this is a double whammy, this is a recession following a financial crisis, and this is also the final act of America's structural adjustment to globalization and the technology revolution.

That's a really big deal. And I think the real problem is not -- you know, we're going to be focused a lot on messaging and cosmetics ahead of the midterms. The real question is, can an American political party or political movement come up with a powerful economic plan, and one that is maybe really different?

And we're seeing that happen in other countries. Look at Britain. David Cameron's Tories won with a really radical plan, and they got actually...

(CROSSTALK)

IGNATIUS: ... just doesn't work. I mean, it's not like they didn't have a plan.

DOWD: Republicans don't really have to come up with anything over the next 90 days.

ROBERTS: No, that's right.

DOWD: They're going to win a huge amount of seats in the House, a huge amount of seats in the Senate. They're going to win a bunch of governors' races.

To me, the economy is representative of a bigger issue that's out there. I agree the economy is the number-one issue. The problem is, is people out there do not think Washington is listening to them. They don't think they're paying attention to what's going on in America.

And the reason why the economy is so -- has so much anger in it is because people don't think they're being empathetic with where they are in their life. And that's, I think, a problem.

ROBERTS: But they're also -- you know, the voters were also very ambivalent themselves, because on the one hand, the furious...

(CROSSTALK)

ROBERTS: Right, exactly. They're furious with Washington for being furious and for everybody fighting with each other and why doesn't anything work, and yet they're furious and feed into that partisanship tremendously so that there's no right answer for the politicians as they go to face the voters.

AMANPOUR: But also these primaries this week, the White House and Democrats were saying that it's not such a bad bag. We (inaudible) comfort from some of the results there.

ROBERTS: Well, because they were able to re-nominate Michael Bennet in Colorado, and that made them feel good, because they had backed him. But, you know, Newt Gingrich had backed Nathan Deal in Georgia, too, and he won against Sarah Palin's candidate. So, you know...

(CROSSTALK)

AMANPOUR: What does that say about the sort of star of the Tea Party movement?

DOWD: Well, I mean, endorsements always to me are questionable anyway, because the voters ultimately make the decision. I think still Sarah Palin -- Sarah Palin on the Republican side has the most energy and emotion and passion behind her than any other candidate. She can still walk into a city and get 3,000, 5,000 people. No one can do that. So she can have that emotionally. She can charge that, and ultimately it's about her.

I think the interesting thing on the results is that, there's this big wave coming into Washington, and Democrats have a seawall. And what's happened now is Republicans have nominated people that may not be able to win. And so basically the Republicans are putting bricks on top of the seawall and building it higher, that they're going to have less chance of winning in this election because of who they've nominated in some of these places.

IGNATIUS: You know, their biggest problem would be...

ROBERTS: Working on that seawall.

IGNATIUS: ... I suspect, if they -- if they did win. Suppose the Republicans did win control of the House and the Senate. What would they do? What would their program be? You know, they'd be a much easier mark for the Democrats heading toward the 2012 presidential election. You almost think it would be better for Obama...

(CROSSTALK)

ROBERTS: Well, of course it would be better for Obama.

FREELAND: You can try to triangulate...

(CROSSTALK)

DOWD: ... 2012 if the Republicans took one of the branches, because they could either do one of two things which would be beneficial to him. He could compromise and then show him, he's going to build bridges, or he could just say, "They're the problem, they're the problem."

The fear I think the White House has is he's going to get the worst possible result, which is a small margin in the House, a small margin in the Senate, he can't get anything done, but he owns all the levers of government...

(CROSSTALK)

AMANPOUR: So now that we've settled that one, let's move right out of the country to Pakistan briefly, because we did talk about it with Jim Sciutto, but it's been likened to their Katrina. The U.S. is doing the right thing sending relief, right?

ROBERTS: Yes, sure.

DOWD: Yes, absolutely.

AMANPOUR: Politically, economically.

ROBERTS: Absolutely.

AMANPOUR: How...

ROBERTS: Humanitarian.

AMANPOUR: Humanitarian, of course...

FREELAND: Strategically.

AMANPOUR: Exactly. What do you think, though, when you look at this, here's the fight, here's Pakistan nuclear-armed, here's Pakistan having done the right thing, to an extent, having sent its army after the militants, and all of that, all of that just about being washed away literally.

IGNATIUS: Here -- Christiane, here's a country on the edge, a country that's $11 billion in debt to the IMF, barely staggering along, that's fighting an insurgency at home, and all of a sudden, pow, it gets hit with this terrible flood. The latest Pakistani estimate is that there are 20 million people who are affected in the country.

And the question that people are beginning to raise is, is the flood going to be the final additional thing that pushes Pakistan into being a failed state? The army is going to have to focus on rebuilding roads, getting food to people -- I mean the Pakistani army here, hopefully with help from the U.S. military -- but that means they won't be able to fight the Taliban.

I was expecting that there would be an offensive in North Waziristan against the Taliban and Al Qaida this fall. I was even going to go look -- go travel with the Pakistani troops. I have a feeling now the military will be too busy, and that's just one sign...

(CROSSTALK)

ROBERTS: Maybe it doesn't matter, though. Maybe -- maybe the fact is -- I mean, this is -- this is wishful thinking -- but maybe the fact is, is having all of this aid come in from the West -- and particularly from the United States -- and it is our military...

DOWD: Almost solely from the United States.

ROBERTS: ... also -- right, and it's -- and it's not just our military. It's USAID and all of our humanitarian organizations. I work with Save the Children there, and we've been in Pakistan for 30 years and doing this kind of work. Seeing that is more important than saying we can build a mosque in Manhattan, in terms of dealing with the Muslim world.

FREELAND: Well, that presupposes that the aid is effective. And I think to David's point, the other danger -- it's not just that the Pakistani army is not in a position now to go on the offensive against the Taliban. I think the real danger here is that you find the local Islamic organizations, extremist Islamic organizations turning out to be more effective at helping...

(CROSSTALK)

IGNATIUS: ... a lot of people angry...

(CROSSTALK)

FREELAND: I think that -- I think that...

(CROSSTALK)

FREELAND: ... why Western support, particularly U.S. support, is so important right now. You know, U.S. policy has to try hard to make the Pakistanis feel it is not purely a utilitarian relationship, it's not just transactional, that America cares about Pakistan, not just because of its relationship with Afghanistan and the Taliban.

(UNKNOWN): Well, the only reason why we're in Pakistan is because it is transactional.

FREELAND: Yes, so -- so...

(UNKNOWN): And it's vital.

(CROSSTALK)

(UNKNOWN): ... it's vital to our interests and to the interests of the world.

(CROSSTALK)

FREELAND: ... works, because Pakistani...

(CROSSTALK)

AMANPOUR: And we barely have any time left, but 30 seconds to talk about Russia about to put the nuclear fuel into the Bushehr plant in southern Iran.

IGNATIUS: If you wanted one more piece of bad news this week for the Obama administration, it would be that Russia, which has really been very cooperative on Iran, which has joined us in U.N. sanctions that have been tougher than people expected, has decided that it's going to ship -- next week it's going to begin to operationalize a nuclear reactor in Iran, a civilian nuclear reactor that generates power. And, you know, that's the last thing this administration would have wanted.

AMANPOUR: On that note -- on that note, the roundtable continues in the green room at abcnews.com/thisweek, where you can also find our fact checks, in conjunction with PolitiFact.

Also on our Web site now, dramatic images from Russia this week, where wildfires have ravaged that country. Choking smoke from the fires and record high temperatures have led to hundreds of deaths in Moscow, and the drought has destroyed a quarter of Russia's grain crops. It's now banned exports, causing price spikes, and raising concerns of a global food crisis in the fall.

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