'This Week' Transcript: Former President Bill Clinton; Iranian Foreign Minister Javad Zarif

STEPHANOPOULOS: And that was the scene in the House overnight.

Our powerhouse roundtable here to weigh in on what's next in the shutdown showdown.

First, the take of a president who has been there. Bill Clinton was in the White House the last time the government shut down in 1995 and 1996. And when it was over, he was on a smooth glide path to re-election.

His advice to President Obama: stand firm.


CLINTON: The president has to take the position he's taken which is, you, not me -- you voted to spend this money. America's one of -- maybe the only country in the world that requires two votes to spend money, first, they vote to spend the money and then they got to vote again to issue the bonds to, in effect, borrow the money from the American people to cover the spending they have already voted for.

You can't negotiate over that. And I think he's right not to.

STEPHANOPOULOS: But as you know, one of the Republicans say is that you did that, you did negotiate over the debt limit back in 1996. They do control the House, so doesn't the president have to negotiate and they're banking on it.

CLINTON: Well, but the negotiations we had were extremely minor. And keep in mind, there were two different things, number one is, the economy's growing and the deficit was going down.

We didn't give away the store. And they didn't ask us to give away the store. It was more like, we got out here on this ledge, please give us something. Face saving way to walk back.

And we didn't stop negotiating. When we passed the balanced budget bill for example, there's no opportunity for that in this forum. We don't have enough time. They don't want. They're mad because they don't want to negotiate.

STEPHANOPOULOS: This deadline is coming. October 17, says Jack Lew, we hit that debt limit. The consequences of not negotiating are so high -- default.

CLINTON: Yeah, but there's nothing to negotiate with, he shouldn't delay the health care bill. It's the law. And we're opening the enrollment on October 1.

So, I think that's a nonstarter. If I were the president, I wouldn't negotiate over these draconian cuts, they're going to take food off the table of low income working people while they leave all the agriculture subsidies in for high income farmers and everything else. I just think it's chilling to me. It seems almost spiteful.

STEPHANOPOULOS: But doesn't it come undone if there's a default? I mean, obviously, if you're not going to negotiate, you're betting on the other side simply caving.

CLINTON: That's right.

This is the House Republicans and the Tea Party people saying we don't want to negotiate with the Democrats. We want the dictate over the senate, over the House Democrats, over the speaker of the House of our own party and over the president, we insist on dictating the course of the country.

STEPHANOPOULOS: So you're saying you just have to stand up to that no matter what the consequences?

CLINTON: I think you do. It's terrible, because all over the world, people see, like, you know, I listened to some of Senator Cruz's filibuster on the health care bill and he just kept making all of these claims that just aren't so. And everybody knows they're not. And in other parts of the world, where we draw investment from, they think, why is America majoring in the minors?

But at some point, if they're going to change the way the constitution and fundamentally alter the character of our country and damage the future of a lot of kids you just got to say no. And then hope that there will be a basis for some agreement.


STEPHANOPOULOS: Let's get to this with the roundtable now. We're joined by ABC Matthew Dowd, former governor of Michigan Jennifer Granholm, now teaching at UC -- University of California's system. Bill Kristol of the Weekly Standard, Paul Krugman of the "New York Times" and Princeton. And Paul you're looking great since the last time you were here.

PAUL KRUGMAN, NEW YORK TIMES: Less of me, anyway.

STEPHANOPOULOS: Well, welcome to all of you.

And Bill, let me begin with you. If we were to have been here two months ago, who would have thought a shutdown was possible. But all of the leaders, Republican leaders in the House and Senate against it, yet it's happening?

BILL KRISTOL, WEEKLY STANDARD: Well, these people are electing individually. They're not elected to rubber stamp decisions by Speaker Boehner or by Leader McConnnell. So, they have decided they would like to delay the implementation of a bad law, that is in fact the president himself has had to delay parts of it.

If we were sitting here 11 months ago, though, and the Republicans were in total disarray, Romney had lost, very demoralized party, I think it's impressive with what the Republicans have done. And the Republican House deserves credit for -- the Republican House deserve credit for it.

The party has rallied. The party is doing fine in the polls. The congressional ballot is about even. President Obama has not succeeded, except for that tax hike on the wealthy they had to give him right at the beginning. He's not succeeded in getting his legislation passed, which is a good thing.

STEPHANOPOULOS: But isn't a shakedown going to backfire?

KRISTOL: Not necessarily if it's a day or two or three. There have been shutdowns throughout the last 25 years. As you know, they don't always backfire.

It's a little delicate. But look, it's why not delay at least parts of Obamacare for a year?

KRUGMAN: Because it's the signature achievement. Its funny--

KRISTOL: Is that a good reason? A political reason like that?

KRUGMAN: It's a good thing. It happens in fact to be a very good law. One of the things I think that's going on here is just a failure on the part of the Republican caucus to actually understand anything about this thing. That they, you know, not they, they haven't done the policy. They haven't understood.

In fact almost all of the substantive news about Obamacare over the last couple of months has been good. The premiums are coming in well below expectations. Healthcare costs are moderating. Probably there will be some technical glitches with computer systems. But those are not fundamental. So actually people who support this law are looking forward, they're actually almost hearing, I think, the preliminary results.

So the odds are that this is going to do a lot of good for a lot of people. Why not put it into effect now?

KRISTOL: Should the president delay the employer mandate?

KRUGMAN: The employer mandate was--

KRISTOL: Wait should he? Yes or no?

KRUGMAN: Yeah actually because--

KRISTOL: But not the individual mandate.

KRUGMAN: They are completely different--

KRISTOL: Business gets the delay but individuals don't.

KRUGMAN: That's what I'm talking about, this policy ignorance. Not understanding. That the employer mandate is basically a trivial add-on to the law. While the individual mandate is essential to that. You don't understand that. You don't understand--

STEPHANOPOULOS: Intellectual and political argument I guess the bottom line though is that they don't have the votes to delay Obamacare right now. I think a lot of the country looks at this and sees both sides saying, what are they doing right now?

DOWD: Well first I want to say after watching your interview with the Foreign Minister of Iran. It's somewhat amazing and ironic that more reasonable and enlightenment is coming out of the Middle East than is coming out of Washington D.C. these days. With everything that's happened with Syria and the chemical weapons and all that, it's like we're now in a situation where we have to look at ourselves and say, why isn't our own act in order?

One of the biggest problems that's going on I think in this country today, this government shutdown, which everybody knows is a bad idea and ultimately will be bad for the Republicans and they only hope it's only temporarily bad.

That is that way is, there's a large part of both parties that refuses to accept what actually is going on. So they don't, if they don't like the result of an election, the contest the election. If they don't like the result of a legislative something passing the Senate, passing the House, signed by the president, which is the Affordable Care Act or Obamacare, we actually have a situation, we should accept it.

I have some disagreements with it. I think there's great parts of it. I think there's great parts of it. I think there's some parts of it that could be problematic. But it is the law and we should accept it. But part of the problem is in our politics today is that we refuse to accept our institutions, our legislation and our elections.

KRUGMAN: (inaudible) Democrats doing something comparable. I just, you know--

DOWD: Of accepting elections?

KRUGMAN: Of refusing to accept the results of an election.

KRISTOL: Democrats thought the Iraq War was wrong right?

KRUGMAN: But they didn't cut off the funding for it.

KRISTOL: They did try to cut off the funding throughout 2007, 2008. Oh not seriously? What were all those votes about?

KRUGMAN: Where was there a confrontation like the one we're about to have, the scary one about the debt limit.

STEPHANOPOULOS: And that's what I want to get to. It wasn't tied to the debt limit at the time, but the president seems to have made the judgment, Governor Granholm, that negotiation over the possibility of default is even worse. The consequences of negotiating are even worse than the default itself. If he means what he's saying right now.

GRANHOLM: Right because that means every single time they put it off for another month, the debt limit, they will be taken hostage again. And we saw that in 2011 and in fact that's the lesson that people are taking from what happened the last time the negotiation occurred.

It, to me, it is mind blowing this week that we see leaders of our most, biggest global adversaries, Iran, Syria, to your point, acting more rationally than the House Tea Party Republicans. That they are willing to take the whole country, the whole economy down for an issue that they lost in the election, the lost 45--

STEPHANOPOULOS: You know what the counter to that is; they say the president is willing to talk to the Iranians, why doesn't he talk to the Republican Leaders in the House?

GRANHOLM: Well he said that he would negotiate with the leaders in the House, just not a point where you break down the entire fiscal system in the country. I mean if he wants to negotiate, if the House wants to negotiate over the budget, then meet with the Senate. The Senate's past a budget, the House has passed a budget. Do it in the normal--

KRUGMAN: Negotiating is, you give us something, you know, we want, we'll give you something you want. Everybody wants the debt limit raised because no one wants financial catastrophe. So saying give us what we want in return for not provoking this catastrophe which will hurt everybody, that's not a negotiation.

STEPHANOPOULOS: So how does this end?

KRISTOL: With a very short government shutdown and I think it ends with the debt limit actually being raised. And hopefully the president will decide to (inaudible) as previous presidents have on the debt limit. One reason the House Republics are pushing for a negotiation is that the Senate does not take up (inaudible) House Republicans past.

They past (inaudible) the individual mandate (inaudible) to Obamacare. That's why it's a good thing to delay it for a year. And it's not ready to go into effect. They passed a delay of that for one year, 22 House Democrats voted for it. Speaker, Majority Leader Harry Reid just hasn't taken it up.

GRANHOLM: The Senate has passed a budget--

KRISTOL: They haven't taken it up.

GRANHOLM: The House has passed a budget.

KRISTOL: They haven't taken it up.

GRANHOLM: The place to negotiate this--

KRISTOL: Suddenly this great approval of the Foreign Minister of Iran and Syria, I think you guys really want to rethink before you start praising a guy who sat here and just lied to George about whether they have a nuclear weapons program or not. That is not like oh gee they're so wonderful--

GRANHOLM: No, the point is that people are willing to sit down and be rational for people who we have been adverse to for long periods of time. And you've got the House Republicans who will not act rationally.

KRISTOL: Do you really want to take that position--

GRANHOLM: One more point about this--

KRISTOL: That the Iranian Republican Guard is more rational than the House Republicans?

GRANHOLM: The show--

KRUGMAN: The way this ends, or at least the theory is that it ends with, believe it or not, Wall Street coming to the rescue. That we have a government shutdown and Wall Street suddenly says, oh my God, this is real. These people really are that crazy and they put pressure on the Republicans--

DOWD: That's to me, that's one of the biggest unfortunate things in all this is because I think so much of what's going on in Washington D.C. is we're taking our cues from Wall Street which is only affecting, by and large, people own stocks.

But by and large 10% of the country is the only part of the country that has grown in the last 20 years, mainly by Wall Street. And so much of what's going on with the Republicans and the Democrats is their cues are coming from Wall Street.

But what I want to say one thing, I think the Republicans are being unreasonable and they're doing things that could politically hurt them in this and they should be in a process of getting this deal done.

But the Republicans that, it's not just Tea Party, 70, 80 members. That part of the Tea Party Caucus or whatever you call it represents a large segment of the country which does not trust the federal government at all to do anything efficiently and effectively.

The president has not done any job at all in convincing the public that the government should be involved in stuff and it can do it well. And I think the Tea Party or whoever is a reflection of the country does not trust Washington D.C., it does not trust the Federal Government.

STEPHANOPOULOS: That's true but let me then bring this question back to Bill Kristol. You say you think this is going to get resolved. It appears though given the factions in the Republican Party who don't want to approve anything, that the only way this gets resolved is Speaker Boehner says I'll do it with Democratic votes. Doesn't that cost him the Speakership?

KRISTOL: It doesn't cost him the Speakership if he has to do it. But look, here's what's going to happen. Reid, the Senate will strike, (inaudible) tempted to delay Obamacare for a year. I think Republicans might then come back and say back, how about striking the Congressional exemption that the president just decided to give members of Congress and their staff. Maybe that the Congress will accept on the debt, on the continuing resolutions.

What about the medical device tax which the Republicans added with Democratic votes last night which most Democratic Senators are against?

(Inaudible) Democrats were being utterly intransigent in negotiating.

GRANHOLM: To proof how non-serious this is though, they also added the ability of employers to deny contraception to women which is also something which is also completely politically ridiculous for them. And John Boehner as Speaker, I think he has already ceded that territory. The real Speaker of the House is Ted Cruz.

STEPHANOPOULOS: Are you confident this gets done?

KRUGMAN: No, I'm not at all. I think we may, we're running 30% chance of, I mean government shutdown is a given. But that is, we're all kind of feeling, OK that's all right. Which tells you what kind of a state we're in. But no, I think there's a 25, 30% chance of default. And God knows what happens then.

STEPHANOPOULOS: And given that, you still endorse the president's position of not negotiating--

KRUGMAN: Because his choice is not whether there will be a default. His choice is whether you just put off this issue a month or two. It's just going to keep coming back unless it's resolved. Why not do it now?

DOWD: And also the politics of all this will be the implementation of Obamacare. If the implementation of Obamacare actually happens and people save and people see savings, they see some wrinkles in it and it goes about reasonably well, the president and the Democrats are going to be fine with that.

If it does not go about reasonably well, somebody's going to address in 2014 or 2015 and fix the problem. But ultimately it's the implementation of the act and I think the Republicans just should have said, go for it. Implement the act and let's see how it goes.

STEPHANOPOULOS: Ted Cruz came close to saying that was his fear this week. That Obamacare would take hold and people would never want to get rid of it.

KRISTOL: Yeah I think he's wrong about that. I think when it takes hold people will want to get rid of it. It doesn't benefit that many people as Paul knows. In the first year, the red numbers are rather small. I said I think it will damage more people as their premiums go up and as families lose coverage as businesses cut back to covering simply the employee himself or herself and families have to go into the exchanges.

So I think its bad law. We'll see how it plays out. But you can't really blame the people who ran saying they would do their best to delay their bad law from happening, from trying to do that. Its like (inaudible) Democrats ran in 2006 saying they were going to get out of Iraq. And they spent all of 2007, 2008--



DOWD: But Bill this law passed, was signed by the president. Then the president ran a re-election campaign, the public voted for him overwhelming. Republicans need to fold their tent and say it's the law.

KRISTOL: I disagree totally.

STEPHANOPOULOS: On that we're going to have to end right now. Thank you all very much. Much more from President Clinton coming up. What's the big lesson he took from Hillary's loss in 2008? And Matt brings us the dramatic story of the Army Ranger who survived "Black Hawk Down" in our Sunday Spotlight. STEPHANOPOULOS: Our Sunday Spotlight shines today on Jeff Struecker, an Army Ranger caught in the firefight with Somali warlords that inspired "Black Hawk Down." The battle took place 20 years ago this week. A life shaking experience that moved him to return to Mogadishu for a dramatic documentary. ABC's Matt Dowd is back with Struecker story.

DOWD: In 1993, Jeff Struecker was a 24-year-old Army Ranger Sergeant tasked with leading a squad of men through the hostile streets of Mogadishu. There harrowing journey, the inspiration for the film, "Black Hawk Down."

Somalia had descended into chaos. The U.S. sent an elite team to help restore order. But on this day, the routine mission went horribly wrong. A Black Hawk helicopter was downed by warlord militia men. An assault mission turned quickly to a rescue mission.

STRUECKER: I went through what is still to this day the most intense gunfight I've ever been in in my life. One of the men that I was responsible for was shot in the head and killed instantly, right behind me. And there was nothing that I could do about it.

DOWD: Then you're told you're going to have to go back out because there's another rescue that has to be done. Did you think you were going out now like on a death mission?

STRUECKER: All of us were thinking, OK this is a suicide mission. If we go back through what we just drove through, every one of us are going to die. Ranger Creed says "I'll never leave a fallen comrade to fall into the hands of the enemy."

Listening over the radio, people's voices were just getting more and more terrified. I started thinking about my family and I started praying.

DOWD: A moment so intense, so powerful, it changed everything.

STRUECKER: It was a life transforming event for me. I think many people think, oh Jeff got shot at and he got scared and he's different because of it. And really that wasn't it. I've been in firefights in previous combat tours before this.

I had a very, very strong faith in Jesus Christ, before I went. But my faith became so real, it became so significant.

DOWD: So much so that Sergeant Struecker became an Army Chaplain and now a Minister.

STRUECKER: Instead of raising children to be spiritual warriors--

DOWD: A dramatically new life but an incomplete journey. The resolution found when he returned to the site of the grisly battlefield this past spring. An incredible trip captured all on camera.

STRUECKER: I'm wishing I had some more guns around me.

DOWD: As you're driving through the streets and driving through the market, you can almost feel your heart pounding. Are you at this point like wow, something could happen actually again?

STRUECKER: Even watching the movie "Black Hawk Down" for the first time, I didn't relive the emotions of Mogadishu until I went back there this spring. Immediately the emotions, the smells, the thoughts from Mogadishu came flooding back like I was just there yesterday.

This is what the roads looked like with people, except for the people all had guns. It was very dangerous. No don't turn back. It's OK keep going. Keep going.

DOWD: For Struecker it was a journey from fighting to family to faith.

Are you glad looking back at your trip, that you went back?

STRUECKER: I don't know if I'd use the word glad. I learned a little bit about myself that I didn't even realize. Would I do it again, a third time? Absolutely not. But I'm glad it's over.

DOWD: For this week, I'm Matthew Dowd in Columbus, Georgia.

STEPHANOPOULOS: And you can see all of "Return to Mogadishu" on our website at abcnews.com/thisweek.

And now we honor our fellow Americans who serve and sacrifice. This week the Pentagon released the names of seven service members killed in support of the war in Afghanistan.

And that is all for us today. Thanks for sharing part of your Sunday with us. Check out "World News with David Muir" tonight and I'll see you tomorrow on GMA.


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