'This Week' Transcript: Napolitano, Gibbs, McConnell

MARCUS: Rosier, slightly rosier for Democrats. And let's remember the president's party always -- almost inevitably loses seats in the mid-year election. And I think the answer to the question depends on what Paul can tell us about where the economy is -- particularly where the unemployment rate is going to be in next spring heading into the fall because that will really determine how people feel about the incumbent party.

I say some in the House, somewhere in the 20s, anything under 20 will be viewed by Democrats as a huge sigh of relief for them. In the Senate, I think it's a little bit more complicated. There are more Republican senators retiring than Democrats and in more divided swingy type states. And so I would say closer to three.

TAPPER: OK, we are getting close to short on time but I do want to ask you a question about the economy for 2010. Your fellow laureate, Joseph Stiglitz has said there's a significant chance the U.S. economy will contract in the second half of 2010. He's calling on the government to prepare a second stimulus. Do you think that's possible?

KRUGMAN: Yes, it's a reasonably high chance. I don't think it's more -- it's less than 50/50 odds, but you know, what we've got right now is a recovery that first of all is not showing up very much in jobs yet. It's being driven by fiscal stimulus which is going to fade out in the second half of next year and by inventory bounce. You know, production was low because companies were running on their inventories. They're stopping doing that so now you've got a bounce in the economy.

But that's also going to run out. So the things we know about are all going to be negative in the second half of next year. Now the financial markets, the last month, the financial markets have gotten really optimistic. You look at things like the term spread on bond rates. They suggest that the financial markets really think there is going to be a much more vigorous recovery. I don't see where it's supposed to come from, so the range is huge here. I would basically go with Joe Stiglitz. I'm really worried about the second half.

TAPPER: OK, I'm going to have to wrap there. The Roundtable continues in the green room on ABCNews.com. You can get political updates all week long by signing up for our newsletter, also on abc.com. Coming up here, "The Sunday Funnies."

END

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